Moody's says Delta's Trainer purchase is negative

Moody's Investors Service said the decision by Delta Air Lines, Inc. to purchase the Trainer refinery complex near Philadelphia from Phillips 66 is negative for Delta's credit profile.

Delta considers the refinery purchase as an improved hedge against the crack spread for jet fuel and anticipates a $300 million reduction in its annual fuel bill, presumably at current jet crack spreads of about $20 per barrel.

However, Moody's said it believes potentially significant operating and financial risks accompany owning and operating an oil refinery, which could lead to shortfalls between actual financial benefits and those of the project's business case.

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