Sky-high fuel costs have made cost-cutting, not growing market share, the mantra for many airlines. One of Delta's riskier cost-cutting moves, buying an oil refinery, looks like it's starting to pay off.
Delta bought the refinery, which is in Trainer, Pa., just outside of Philadelphia, in 2012 for $150 million as a way to hedge against its biggest expense, jet fuel costs.
The idea was to become a "price influencer," Delta CEO Richard Anderson said.
"It's given us the ability to participate in the pricing of jet fuel in the United States," Anderson said. "When you give up 35 to 40 percent of your business, you're not going to be successful. We're of the view at Delta that we control 100 percent of our business and it's our responsibility to navigate high fuel prices."
The bet wasn't a sure thing: Phillips 66, which sold the Trainer facility to Delta, reportedly wanted to sell the shuttered Pennsylvania facility because of its low profit margins.
But after losing a combined $136 million in the previous nine months, the Trainer refinery turned a profit for the first time in the third quarter, bringing in $3 million.
As a result, the price Delta paid for a gallon of jet fuel dropped 5.4 percent to $2.97 during the quarter. Though its overall fuel costs increased 3 percent, which Delta attributed to an increase in flying capacity.