Details on Delta TA
01-10-2015, 10:09 AM
#3171
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Joined APC: Jul 2010
Position: window seat
Posts: 12,544
Of course in 2016 the profit might also be zero. Historically that's probably a far more likely number then 10 billion. I would also be willing to bet oil is in the 80 to 100 dollar range then. We are going to get killed by our hedges next year. american is projected to pay 30 cents a gallon less then us in 15. Combined with the billion dollars invested in the refinery between purchase, upgrades and quarterly losses fuel has not been a bright spot despite managements attempts to justify the purchase.
IOW it doesn't matter what crude is or what we gain or lose on hedges as that is separate from the refinery. Its purpose was to reduce the crack spread/refining costs, and nothing crude does effects that. To that end, isn't it still a success?
If lower oil prices result in lower fuel prices, won't that increase demand for fuel? Won't increased fuel demand result in more fuel needing to be refined? So flooding the market with cheap gas means you have to refine more gas. We now own and control that part of the bottleneck, and control it at a huge discount in our favor.
It was never designed to be an "oil hedge" or to "make a profit" it was done to lower risk and insure a reliable cheap supply. Hasn't it done that wonderfully?
01-10-2015, 10:19 AM
#3172
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Joined APC: Jun 2010
Posts: 852
I just read the forum stuff being posted by the AA guys about their deal. They seem to covet our "concessionary" contract.
They made the deal and then told the reps they had to pass it or the negotiators would lose all credibility with management....
The next offer would be less... The time value of money.... If we don't act now then Anderson and the NMB will put us on ice for years.... etc. etc.
The next offer would be less... The time value of money.... If we don't act now then Anderson and the NMB will put us on ice for years.... etc. etc.
01-10-2015, 11:41 AM
#3173
Gets Weekends Off
Joined APC: Feb 2008
Posts: 19,599
My opinion is that some sort of modified "Stockholm Syndrome" or "Kool-Aid" scenario occurs. The line between management and union fades creating a cohesive relationship thus mildly diluting contractual gains while fortifying management goals. (after all dont most union guys end up in management positions?)
TEN
TEN
01-10-2015, 11:57 AM
#3174
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Joined APC: Dec 2009
Position: 7ERB
Posts: 2,039
TEN
PS. I dont call our contract SUPERIOR, you shouldn't either.
01-10-2015, 12:09 PM
#3175
Gets Weekends Off
Joined APC: Feb 2008
Posts: 19,599
Isn't the refinery "crude neutral" though?
IOW it doesn't matter what crude is or what we gain or lose on hedges as that is separate from the refinery. Its purpose was to reduce the crack spread/refining costs, and nothing crude does effects that. To that end, isn't it still a success?
If lower oil prices result in lower fuel prices, won't that increase demand for fuel? Won't increased fuel demand result in more fuel needing to be refined? So flooding the market with cheap gas means you have to refine more gas. We now own and control that part of the bottleneck, and control it at a huge discount in our favor.
It was never designed to be an "oil hedge" or to "make a profit" it was done to lower risk and insure a reliable cheap supply. Hasn't it done that wonderfully?
IOW it doesn't matter what crude is or what we gain or lose on hedges as that is separate from the refinery. Its purpose was to reduce the crack spread/refining costs, and nothing crude does effects that. To that end, isn't it still a success?
If lower oil prices result in lower fuel prices, won't that increase demand for fuel? Won't increased fuel demand result in more fuel needing to be refined? So flooding the market with cheap gas means you have to refine more gas. We now own and control that part of the bottleneck, and control it at a huge discount in our favor.
It was never designed to be an "oil hedge" or to "make a profit" it was done to lower risk and insure a reliable cheap supply. Hasn't it done that wonderfully?
That does not even get into potential long term environmental obligations.
01-10-2015, 12:10 PM
#3176
Gets Weekends Off
Joined APC: Feb 2008
Posts: 19,599
The results have been superior compared to other airlines. Read the other airline threads. Our contract seems to be the Holy Grail for most.
01-10-2015, 01:27 PM
#3177
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Joined APC: May 2010
Position: B-52 IP / Delta Poolie
Posts: 188
The refinery has lost money almost every quarter since we have owned it. It does no good to save 7 cents a gallon on jet fuel and lose 15 cents a gallon on the other products. There is a reason not a single other airline has followed our example. Between the purchase cost, upgrade costs and ongoing losses were down about a billion dollars.
That does not even get into potential long term environmental obligations.
That does not even get into potential long term environmental obligations.
improvement year-over-year."
- Pulled straight from Delta's latest earnings report.
01-10-2015, 01:43 PM
#3178
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Joined APC: Feb 2008
Posts: 19,599
As I stated they have lost money almost every quarter. I think there have been 2 or 3 quarters where a profit was made.
01-10-2015, 04:12 PM
#3179
Doesn't Get Weekends Off
Joined APC: Jun 2007
Posts: 2,598
The refinery has lost money almost every quarter since we have owned it. It does no good to save 7 cents a gallon on jet fuel and lose 15 cents a gallon on the other products. There is a reason not a single other airline has followed our example. Between the purchase cost, upgrade costs and ongoing losses were down about a billion dollars.
That does not even get into potential long term environmental obligations.
That does not even get into potential long term environmental obligations.
01-10-2015, 04:17 PM
#3180
Doesn't Get Weekends Off
Joined APC: Jun 2007
Posts: 2,598
No, that's why it makes sense to monetize the profit sharing if it's above and beyond the negotiated payrates. In my case it's probably better to stick with profit sharing with the few years I have left. If however i had 20 years to go I would want the money in the payrates.
"The industry is fundamentally changed. Double digit rate of returns are hear to stay!" That was the Mantra being touted by management and unions alike in 2000. By June of 2001 the airlines were facing some of the biggest losses ever. It turned in the blink of a eye. For the young guys we need to be very careful how much at risk based compensation we leave in our contracts. It would be beyond stupid to negotiate based on good times forever.
"The industry is fundamentally changed. Double digit rate of returns are hear to stay!" That was the Mantra being touted by management and unions alike in 2000. By June of 2001 the airlines were facing some of the biggest losses ever. It turned in the blink of a eye. For the young guys we need to be very careful how much at risk based compensation we leave in our contracts. It would be beyond stupid to negotiate based on good times forever.
I've got 28 years to go and would much rather have my PS monetized into payrates IF it is in additional to negotiated rates. Problem is, they will do what they did in C2012 and just move it from PS to payrates which did none of us any good.
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