Delta Rises on Fuel Cost Reduction Efforts

Energy

Published: September 7, 2012 10:27 am

This morning’s disappointing employment numbers from the Labor Department haven’t stopped Delta Air Lines Inc. (NYSE: DAL) investors from pushing shares 3% higher in morning trading to nearly $9.50 per share. The 52-week range is $6.64 to $12.25.

Delta said Thursday it expects a “solidly profitable” third quarter even as rising fuel prices pressure margins. As a means to keep its fuel costs low, Delta will move further into the oil refinery business. While other airlines have not followed into the business, the play could give Delta an edge if what it pays for jet fuel drops considerably because it has its own source. According to the Washington Post:

Delta Air Lines is looking into buying cheaper North Dakota crude oil to feed its new refinery near Philadelphia, instead of the more expensive overseas crude that has fed the refinery in the past.

Delta bought the idled refinery at Trainer, Pa., in June.

Rising fuel costs cut deep into the Atlanta-based carrier’s second-quarter profit. Delta reported that its net income fell 57.6% from the year ago quarter to $198 million.

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