United takes $30,000,000 stake in biofuel innovator
Jun 30, 2015, 6:31 am
#1
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United takes $30,000,000 stake in biofuel innovator
United Continental takes stake in biofuel innovator
http://www.seekingalpha.com/news/2606315
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http://www.seekingalpha.com/news/2606315
http://filecache.drivetheweb.com/mr5...ic_Fulcrum.jpg
Jun 30, 2015, 7:23 am
#2
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Jun 30, 2015, 7:47 am
#3
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UA buys into alternative fuel; DL bought an oil refinery. I'm not versed in the energy industry to speculate how practical/profitable/sustainable this actually is, but I recognize the pattern of UA copying DL for the umpteenth time, and again.
Jun 30, 2015, 7:59 am
#4
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This is different and to some extent perhaps a bit innovative.
Jun 30, 2015, 8:06 am
#5
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Airline investment in alternative fuels and energy assets is hardly a novel (or unique-to-DL) strategy.
Jun 30, 2015, 8:08 am
#6
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Alternative fuels sometimes turn out to be more expensive to produce or don't get the volume demand it takes to become cost efficient.
This is not about sustainability, it's about finding a lower cost fuel as this is a huge expense for an airline. F you want to give UA credit, it should be for seeking ways to lower costs.
Jun 30, 2015, 8:10 am
#7
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I only know of airlines having committed to buy/use certain amounts of alt fuels. Taking (partial) ownership in an alt fuel company is new, I believe.
Jun 30, 2015, 8:28 am
#8
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It is an interesting play, as the biofuel sector has certainly taken a hit lately with low oil prices. Seems to me that it could turn out to be a rather shrewd long-term buy low/sell high opportunity.
Jun 30, 2015, 8:37 am
#9
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Don't forget speculative.
Alternative fuels sometimes turn out to be more expensive to produce or don't get the volume demand it takes to become cost efficient.
This is not about sustainability, it's about finding a lower cost fuel as this is a huge expense for an airline. F you want to give UA credit, it should be for seeking ways to lower costs.
Alternative fuels sometimes turn out to be more expensive to produce or don't get the volume demand it takes to become cost efficient.
This is not about sustainability, it's about finding a lower cost fuel as this is a huge expense for an airline. F you want to give UA credit, it should be for seeking ways to lower costs.
Jun 30, 2015, 8:54 am
#11
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I do applaud any company that looks for big ways to reduce cost, rather than a million small cuts, without impacting their product quality or price. It takes guts (or maybe $30M) to do that. If that works, this will be a good move.
Jun 30, 2015, 8:56 am
#12
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I can certainly understand the rationale, but I'm never convinced by vertical integration, especially when it comes to airlines. Generally, they seem to get outside their areas of expertise quite quickly (and park the thoughts about whether there any in the first place).
I remember when Pan Am decided to get into hotels - arguably they should instead have got out of airplanes - but it all ended badly. Likewise catering operations, booking systems etc. Generally external providers seem to do a better job. And there's almost no synergy possible with only a minority stake.
I remember when Pan Am decided to get into hotels - arguably they should instead have got out of airplanes - but it all ended badly. Likewise catering operations, booking systems etc. Generally external providers seem to do a better job. And there's almost no synergy possible with only a minority stake.
Jun 30, 2015, 9:00 am
#13
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Agreed. Could be an opportunity to obtain the product at preferential rate, and a long-term investment with an eye toward unloading it at a profit, if the company is viewed to be at a depressed value currently. Jet-A won't be this cheap forever...
Jun 30, 2015, 9:01 am
#14
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. I hope this works out of UA, if not it's going to be a big write off and a step in the wrong direction. DL took a far smaller risk in their refinery purchase....they invested in the present not the future.
Jun 30, 2015, 9:05 am
#15
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I can certainly understand the rationale, but I'm never convinced by vertical integration, especially when it comes to airlines. Generally, they seem to get outside their areas of expertise quite quickly (and park the thoughts about whether there any in the first place).
I remember when Pan Am decided to get into hotels - arguably they should instead have got out of airplanes - but it all ended badly. Likewise catering operations, booking systems etc. Generally external providers seem to do a better job. And there's almost no synergy possible with only a minority stake.
I remember when Pan Am decided to get into hotels - arguably they should instead have got out of airplanes - but it all ended badly. Likewise catering operations, booking systems etc. Generally external providers seem to do a better job. And there's almost no synergy possible with only a minority stake.