Analysts still sceptical of Delta Air Lines refinery acquisition

This week, Delta Air Lines confirmed rumours that it was purchasing a refinery on the US east coast, a first-of-its-kind transaction. As details of the deal have emerged, some observers have warmed up to the idea that Delta can better manage its fuel price risk by acquiring the Trainer refinery outside of Philadelphia. But analysts warn that it will be challenging to make the arrangement work

"It's slightly more intriguing and understandable than it was a week ago, but they're swapping one risk for another," says Mike Corley, president of Mercatus Energy Advisors, a Houston-based consultancy that advises companies on fuel hedging.

Delta Air Lines said on Monday that it would buy the Trainer refinery for $150 million from Phillips 66, the newly formed refining spin-off of ConocoPhillips, and that it would spend an additional $100 million to upgrade the 185,000 barrel-per-day facility