Delta’s Unprecedented New Deal
Delta Air Lines Inc. (NYSE:DAL) made history on Monday when it struck a deal with ConocoPhillips (NYSE:COP) to buy a refinery in an attempt to reduce fuel costs for itself. Fuel costs typically account for roughly a third of an airline’s operating expenses.
Delta will pay ConocoPhillips $150 million for the Pennsylvania oil refinery, which will be managed by Jeffery Warmann, an industry veteran. According to Delta, the deal is expected to close within the first half of the year.
Under a three-year agreement, BP plc (NYSE:BP) will supply crude oil. Both BP and Phillips 66 will receive shares of the gasoline, diesel, and refined fuel.