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Delta Air Lines announced plans to purchase an oil refinery outside of Philadelphia, a novel approach to reducing its fuel costs.
A Delta spokesman said the company believes the purchase is the first of its kind by a major U.S. airline.
Delta will buy the Trainer refinery for $150 million from Phillips 66 a company that is set to be spun off from energy firm ConocoPhillips.The purchase is expected to be finalized by the end of June.
"Acquiring the Trainer refinery is an innovative approach to managing our largest expense," Delta CEO Richard Anderson said in a statement. "This modest investment, the equivalent of the list price of a new widebody aircraft, will allow Delta to reduce its fuel expense by $300 million annually and ensure jet fuel availability in the Northeast."
Delta said it intends to spend $100 million to convert the refinery's existing infrastructure in order to maximize jet fuel production. The site, it noted, offers easy access to New York airports and Delta hubs LaGuardia and JFK.
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