Delta Air Lines is seeking an investment partner for its oil refinery in Pennsylvania.
Atlanta-based Delta bought the Trainer, Pa. oil refinery for $150 million in 2012 to gain more control over its fuel costs.
The refinery is run by Delta subsidiary Monroe Energy and the airline said its goal is to provide "the lowest cost jet fuel in the industry." But after buying the facility, Delta encountered challenges in maintaining consistent profits at the refinery.
Delta said it expects to retain an ownership stake in the Trainer refinery, which would continue with its current level of jet fuel production. But it said a strategic partner would focus on production of other products such as gasoline and diesel.
Required maintenance and improvements for the refinery are expected to cost $120 million in the fourth quarter to keep up operations for the next four to six years, according to Delta.
"After several years of ownership it is natural for Delta to seek other opportunities that might exist to optimize the benefits to Delta and maximize the value of other aspects of the refinery for a potential joint venture partner," said Delta chief financial officer Paul Jacobson in a written statement.
The airline is working with investment banks Barclays and Jeffries to explore a potential joint venture by the end of 2018, but indicated that reaching a deal is not assured.
Meanwhile, Delta said it would be “business as usual for the refinery,” which supplies fuel to its northeast operations. Delta has a domestic hub at New York’s LaGuardia Airport and an international hub at New York JFK.
About the Author
