Delta Air Lines said Wednesday it has "absolutely" no intention of selling its refinery in Trainer, Delaware County, after a consulting firm assesses its value, chief financial officer Paul Jacobson told a J.P. Morgan transportation conference.
"Nothing has changed," Jacobson said. "We believe the refinery continues to be a strong benefit to Delta, not only in terms of the cost of jet fuel, but also control of supply in the Northeast region which gives us even more confidence in our ability to supply the fuel that we need at an effective cost."
Reuters reported on Tuesday that Delta had hired a consultant to assess the impact on jet fuel prices if the airline sells or closes the refinery it purchased five years ago.
Reuters, citing two sources, said that a Dallas consultant firm was asked to assess the financial value of the refinery's assets and study other scenarios, such as other regional refineries closing, and the financial impact of new emissions regulations, the sources said.
"The refinery is a piece of the Delta's overall fuel strategy," Jacobson told J.P. Morgan analysts. "We've consistently been able to deliver an unhedged cost advantage to the industry, sometimes as high as 7 cents to 8 cents a gallon. The refinery is a big part of that."
"Yes, we hired consultants," he said. "We hire consultants all the time to help us answer questions. The questions that we have over five years is to make sure that we are continuing to quantify the value that we see the refinery bringing us, which is how much of an impact do we have on the supply market and what can we continue to do to bring jet fuel costs down."
Delta bought the idled ConocoPhillips refinery in 2012 for $150 million as a source of discounted jet fuel.
Operated by Delta subsidiary Monroe Energy LLC, the refinery posted a $42 million loss in the fourth quarter, and a $126 million loss in 2016. Until last year, the refinery had posted seven consecutive quarters of profitability.
"I'd like to take this opportunity to absolutely reinforce our commitment to the refinery and the strategy," Jacobson said Wednesday, "and to the people that work hard, and have given their lives to the refining industry in Philadelphia, and what they have done to help that Trainer strategy."
At an investor day on Dec. 15, Jacobson told analysts, "We get a lot of questions about the refinery and make no mistake, the refining business is cyclical. Perhaps the only thing in our career that may have been more cyclical than the airline industry is the refinery business."