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Delta’s oil refinery sinks to loss in 1H 2016
The refinery was profitable in both 2014 and 2015. (atwonline.com) Más...Sort type: [Top] [Newest]
So, Delta's refinery entity went $38 mil in the red for the 1st half of the year.
Delta's airplane entity bought fuel that cost $38 mil less than the production cost.
What is the overall effect on the total Delta bottom line. Am reminded of the test question 'if a cow weighs 3000 pounds on 4 legs, how much does it weigh on 3 legs?
Delta's airplane entity bought fuel that cost $38 mil less than the production cost.
What is the overall effect on the total Delta bottom line. Am reminded of the test question 'if a cow weighs 3000 pounds on 4 legs, how much does it weigh on 3 legs?
Exactly! We're just talking accounting.
And for tax purposes a loss will offset any taxes paid on profits the last two years and might even qualify them for a government grant or two. That is a great aspect of selling your product to yourself....the price can be "flexible".
Tough call when the price of oil is volatile. They got burned by making a bad call on predicting prices on the futures market or hedging. Many others did as well as oil fell well below their hedge prices.
Once their bad hedges are used up if they get deliveries at current prices (or the earlier lower ones) this should return to profitability. At the moment there is a glut of oil available, but it doesn't take much to disrupt the market and push up prices.
Once their bad hedges are used up if they get deliveries at current prices (or the earlier lower ones) this should return to profitability. At the moment there is a glut of oil available, but it doesn't take much to disrupt the market and push up prices.
I was fascinated with the news about delta purchasing this refinery several years ago, for it seemed to be clever and farsighted to do so then. Now I wonder if delta should have gone further by adding some production oil fields. By purchasing more of the production elements, so as to get an even better price and supply certainty.
Plus ... the factory has american workers in an american factory .....