The great oil refinery experiment is coming to an end at Delta Airlines

Airlines live and die on fuel prices – when the price of oil (and the jet fuel derived from that oil) is high, you’ll see lot of headlines about massive losses in the airline sector.  When oil prices are low, the story lines switch to “best revenues in X number of years for (pick your airline…well, anyone except United)”. This profitability boom & bust cycle drove a bit of gold rush in the ETRM/CTRM market about 5-10 years ago when airlines began to focus more on managing their fuel costs via hedging and looked to the CTRM vendors to supply the systems they needed to measure their exposures and develop hedging strategies to address them.  During that period, a number of vendors including Openlink and Allegro, and particularly Solarc (at the time), all signed major and global airlines on as customers. One airline took bit of different route however, not so much relying on hedging but more on owning the means of production…Delta, the largest US airline, decided they would enter the refining business so that they could better control the cost of fuel and ensure they had adequate supplies in their critical Northeast markets, an area in which the… continue reading
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