Last week, Delta Air Lines bought an oil refinery for $180 million or, rather, the list price of a new wide-body jet. Put that way, it doesn’t sound so strange.
Still, it does sound like a risky marriage. (But aren’t they all?) Delta will also invest another $100 million to maximize jet fuel capacity and will get $30 million for Pennsylvania as part of the deal.
Wall Street, for one, thinks the airline got a good deal with investors sending Delta stock up almost 2 percent the day the deal was announced.
Perhaps, this marriage might last. Like all airlines, Delta offsets its fuel bill – almost $12 billion last year – with hedging contracts. But even taking these bets into account, Delta’s fuel cost per gallon still increased more than 40 percent between 2009 and 2011
For its part, Delta says it can save $100 million this year and as much as $300 million annually in the future. To run such a specialized business, Delta has hired an executive with 25 years of refinery experience. Jeffery Warmann did a stellar job running a Murphy Oil plant. (Our research intern Gigi Oogle says we know more about the refining business than we thought since Murphy Oil runs the gas stations outside of Walmart Superstores.)
While Warmann has his work cut out for him, how about the manager Delta puts in charge of installing seat belts and making sure employees use them on some 6,000 baggage handling vehicles around the country?
News that Delta agreed to an OSHA order to do just that came a couple of weeks before the oil deal broke. To be sure, someone died so we don’t mean to make light of the matter one bit.
We did, however, find out more details on the accident. This part we knew: A tug driver who was not wearing a seat was thrown onto the pavement and died. What we didn't know was that the accident was the result of the tug colliding with a food service truck.
Seat belt or not, it was a terrible accident and reminds everyone to be safe out there.
What’s your take on the order? We asked our Ground Support Worldwide LinkedIn group for members’ opinions and received a lot of feedback. Most wondered how Delta could enforce the order, particularly for the “old rampies.”
Here’s one to sum up enforcement:
“I've seen seat belts on forklifts and GSE that were tied in knots behind the seat or wadded up under it. I stress the importance of using installed belts to ensure benefits in case of accident or injury! Like anything it will be the Supervisor that that will have to enforce it and he MUST have support from the company.”
And another to sum up the need for seat belts:
“Most ramp equipment has no soft ride. It's like riding a skate board hard as a rock. It actually hurts to ride. So if you hit a bump on a hard seat belt loader. You can be ejected.”
OSHA certainly plans to extend this order to other airlines. Did you get the recent “Dear Airline” letter from the agency?
Our LinkedIn Group is certainly a good place to go to chime in. And you can always call me directly at 920.563.1644 or email me at [email protected].
