American vs. Delta

Old Apr 17, 2019, 1:22 pm
  #61  
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Originally Posted by GunsOfNavarone
Both DL and SW hedge their fuel exposure...
Delta hasn't been hedging fuel exposure for about three years. United hasn't been hedging, either. https://www.bloomberg.com/news/artic...er-fuel-prices

Delta certainly has less debt and higher free cash flow. (As a flyer, not investor, I'm not sure I care.) It also has a much older fleet and will be spending beaucoup on new aircraft over the next five-eight years.
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Last edited by 3Cforme; Apr 17, 2019 at 1:28 pm
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Old Apr 17, 2019, 1:32 pm
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Originally Posted by 3Cforme
Delta hasn't been hedging fuel exposure for about three years. United hasn't been hedging, either. https://www.bloomberg.com/news/artic...er-fuel-prices

Delta certainly has less debt and higher free cash flow. (As a flyer, not investor, I'm not sure I care.) It also has a much older fleet and will be spending beaucoup on new aircraft over the next five-eight years.
Delta absolutely hedges their fuel exposure. It is called Trainer, PA. Delta hedges by owning a refinery.

""Seven years ago, Delta Air Lines (NYSEAL) made the unusual decision to buy a refinery, to protect against the risk of high crack spreads -- the difference between the cost of crude oil and the cost of refined products like jet fuel. Based on the Trainer refinery's capacity of 182,000 barrels per day, a $16-per-barrel jump in the crack spread would boost its profit by $3 million per day. By contrast, other airlines have no choice but to pay the prevailing jet fuel spot price. To the extent that airlines hedge their fuel costs, they typically hedge against changes in crude oil prices, so they aren't protected against a surge in refining margins. That's precisely why Delta bought its refinery in the first place.Assuming jet fuel prices remain elevated for the month of September, many airlines could be forced to reduce their Q3 margin forecasts. As the only airline that owns a refinery, Delta is uniquely insulated from this threat.""

I can't speak of United's past, but United's CEO (Scott Kirby), was Chairman Parker's right hand man and battle buddy for many years. Kirby at United is simply executing what Parker did. No surprise there.

Last edited by GunsOfNavarone; Apr 17, 2019 at 1:41 pm
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Old Apr 17, 2019, 4:26 pm
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Originally Posted by GunsOfNavarone
Delta absolutely hedges their fuel exposure. It is called Trainer, PA. Delta hedges by owning a refinery.

""Seven years ago, Delta Air Lines (NYSEAL) made the unusual decision to buy a refinery, to protect against the risk of high crack spreads -- the difference between the cost of crude oil and the cost of refined products like jet fuel. Based on the Trainer refinery's capacity of 182,000 barrels per day, a $16-per-barrel jump in the crack spread would boost its profit by $3 million per day. By contrast, other airlines have no choice but to pay the prevailing jet fuel spot price. To the extent that airlines hedge their fuel costs, they typically hedge against changes in crude oil prices, so they aren't protected against a surge in refining margins. That's precisely why Delta bought its refinery in the first place.Assuming jet fuel prices remain elevated for the month of September, many airlines could be forced to reduce their Q3 margin forecasts. As the only airline that owns a refinery, Delta is uniquely insulated from this threat.""
It's so successful that they've been trying to sell it for a while now.

I did like get a chuckle at the embedded hyperlink to Motley Fool.
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Old Apr 17, 2019, 9:55 pm
  #64  
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Originally Posted by GunsOfNavarone
Delta absolutely hedges their fuel exposure. It is called Trainer, PA. Delta hedges by owning a refinery.
You're confusing trying to limit the crack spread with hedging. Owning a refinery does not hedge the underlying cost of a barrel of oil. Here's a quote from the present CEO in 2016. https://www.forbes.com/sites/uhenerg.../#2d5e159c3383
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Old Apr 17, 2019, 9:56 pm
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You're confusing trying to limit the crack spread with hedging. Owning a refinery does not hedge the underlying cost of a barrel of oil. Here's a quote from the present CEO in 2016. https://www.forbes.com/sites/uhenerg.../#2d5e159c3383

The quality of analysis one gets from Motley Fool is worth every dollar one pays for it.
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Old Apr 17, 2019, 10:07 pm
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Originally Posted by 3Cforme
You're confusing trying to limit the crack spread with hedging. Owning a refinery does not hedge the underlying cost of a barrel of oil. Here's a quote from the present CEO in 2016. https://www.forbes.com/sites/uhenerg.../#2d5e159c3383
We can go back and forth on this, glass half full, glass half empty. What is hedging, etc.

Delta Air Lines acquired an oil refinery in April2012 as a strategic move to hedge against higher fuel prices.

The above is from an Analysis paper written from three people at Embry Riddle Aeronautical University and a link to their publication:
https://commons.erau.edu/cgi/viewcontent.cgi?article=1457&context=publication


Below is a NYT article the headlines:
Delta Buys Refinery to Get Control of Fuel Costs

Delta Air Lines said on Monday that it had agreed to buy a refinery near Philadelphia from ConocoPhillips to offset the risk of higher jet fuel prices.

https://www.nytimes.com/2012/05/01/b...-refinery.html

If Delta sells the refinery, what will it do to hedge fuel, I don't know. I do know that Southwest has traditionally hedged fuel, is a consistently profitable airline, has considerably lower debt than AA, and has never filed for bankruptcy protection. Not buying insurance and instead "self-insuring" is a great cost savings too...... until.....

Seems NYT, Analysis from Embry Riddle define Delta's ownership of the refinery as a hedge, I accept that you do not.

Last edited by GunsOfNavarone; Apr 17, 2019 at 10:20 pm
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Old May 5, 2019, 8:56 am
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AA v. DL for secondary airline - or switch?

I know there are several other threads like this one. But most people seem to be getting much higher status than me so it doesnt really apply. I see lots of solid advice for people who are very different than me.

I'm flying out of LIT (Bill and Hillary Clinton National Airport). We have WN, DL, AA, and UA as the big carriers. I fly 12-18 times each year. I fly WN when I can because of Companion Pass. Im not sure its really worth it because I have a bunch of kids and my wife cant travel much. But its nice to have and my credit card spend puts me where I need to be. Im on track to narrowly keep A-List status for 2020, which is handy. Without it I would not fly Southwest because I refuse to hover at T-24 or pay for EBCI out-of-pocket. The points also work out well on WN. I buy some last-minute flights with no cheap fares, so the points pile up. For personal travel, where I'm paying, I plan way out in advance and get RT tickets for < 20,000 miles. That's huge. So if my wife comes with me, I'm effectively going to places like Boston or Orlando for 10k miles per ticket when you count CP. It's hard to see myself leaving WN entirely. But they have this Max 8 problem. I've been cancelled a LOT lately. I know that's temporary, but it showcases their exposure. There are also limited flight options and destinations - lots of early/late departures. And it's going to be hard to keep A-List now that I'm switched to WN, because I have so many flights where I have to go on DL or AA. Even on a scheduled WN flight the other day, I got cancelled and had to book a last-minute flight on AA - missing out on a segment for A-List qualification.

So I'm considering whether I should just use two secondary airlines OR concentrate all my travel on one. My philosophy has been to just use whatever has the best schedule for me. But that means I don't ever have ANY affordable upgrade options. If I concentrated all of my travel in one place and left WN, I'd be Gold some years on Delta and Platinum some years on American (though often Silver / Gold respectively as well).

Are any of you more experienced fliers aware of upgrade options on one that are more affordable than the other?

Other things that are important to me, in no particular order:
1. Last-minute changes (when I can GET a flight, I pay only the cost difference in the fare price on WN)
2. Not missing flights (airport design + on-time %)
3. Comfort - I'm over 6' and need leg room, but I can't afford to upgrade to FC very often and it would be out-of-pocket
4. Wi-Fi - I need it. WN falls short here pretty often, but I've had this problem on all 3.
5. Hubs (avoiding UA because Houston and O'Hare are WAY out of the way for me. Most of my flying is from MN to LA, over to FL and up to DC. Imagine cities within that box. That's 90% of it. Zero international travel.

On DL, I like: ATL. It's so much easier to get around in than DFW on AA. And my route has MD-88s on DL. They're loud but I like them.

But at first glance, it appears that FC upgrade options might be more affordable for people without higher status on AA.

So I'm in an odd spot, here: I fly enough that there are some perks. But the one that serves me the best on perks is getting harder to defend from a business standpoint. It saved some money on fares, but at what cost?

I'm just curious if any of you have ever been in my shoes, and if so what did you do? Or what would you do if you were in my situation? I know this is subjective, so I'm looking for anecdotes as much as anything.
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Old May 5, 2019, 11:13 am
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I wouldnt switch based on the promise of FC upgrades. DL allows you to pay for them and reports are that AA will some too. There are many reports here and on DL that free elite upgrades at lower status tiers are rare, particularly on business heavy routes and days of the week. If you could swing 50k flight miles per year on AA, youd get platinum which allows you to select MCE seats at booking, and DL offers that perk at 75k miles flown per year.

I am assuming you have companion pass based on CC spend and arent even to the level of an A-lister on WN. It kind of leaves you in an elite no mans land. Meaning you might fly enough to be AA gold, but that only allows you to select MCE seats within 24 hours of departure. At you can snag a seat at that time, youd better be prepared for getting a middle seat most of the time. While my situation is different, based on what youve said here- youre probably best to stick with WN
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Old May 5, 2019, 12:16 pm
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Im A-List on WN, but its getting tough to keep it as often as I have to fly another airline.
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Old May 5, 2019, 12:49 pm
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Silver on Delta doesn't get you much these days: a free checked bag + boarding priority (both also obtainable with even the lowest of the Delta Amex cards) and preferred seating. You may find upgrades to F, and even Comfort+, very rare depending on route/day/fare class.

Frankly - and I say this as both a Delta Million Miler and AA Million Miler - I wouldn't chase status on either: buy on routing convenience, schedule, and price.
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Old May 5, 2019, 2:28 pm
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Yeah - and I have all the entry level cards + a Platinum DL card for the yearly certificate.
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Old May 5, 2019, 5:45 pm
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If you can make it to Delta Platinum things get interesting. You get free Same Day Changes as a Gold (although you still need inventory in the purchased fare class, and can't go from connection to a non-stop although routing changes are possible). As a Plat you get a Choice Benefit which can include RUCs, regional upgrade certs, going ahead of all of those waiting for a Medallion upgrade or using miles to upgrade. Free award redeposits as a Plat, too.
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Old May 5, 2019, 11:41 pm
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Originally Posted by 3Cforme
If you can make it to Delta Platinum things get interesting. You get free Same Day Changes as a Gold (although you still need inventory in the purchased fare class, and can't go from connection to a non-stop although routing changes are possible). As a Plat you get a Choice Benefit which can include RUCs, regional upgrade certs, going ahead of all of those waiting for a Medallion upgrade or using miles to upgrade. Free award redeposits as a Plat, too.
DL Platinum status seems unlikely for someone based in LIT flying 12-18 times a year to destinations near the Mississippi and east, and DC and south. Even if flying "18 times a year" means 18 connecting round trips, that's only 72 segments or so, at least half of them <500 miles (to DFW or ATL) and the rest all less than 1000 miles each. That's going to be a long ways short of 75k status on both miles and segments (never mind spend). So it seems to me like the OP's guidance that the 25k elite level (DL Silver or AA Gold) or 50k level (DL Gold or AA Platinum) are far more likely.

(OP mentioned the Platinum DL credit card, not DL Platinum Medallion status.)

Given all that, WN seems like a good primary airline for the OP, and continuing to go based on schedule and price with the other airlines makes perfect sense. If checking bags is a concern, having the credit cards for each of the airlines (as the OP does) mostly eliminates that. DL Gold covering same day confirmed changes is a significant benefit over AA Platinum.
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Old May 6, 2019, 7:08 am
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Platinum might be difficult, but Gold would probably be easier to get at least some years on DL with MQM rolllover. Also, there is the MQM boost potential from the DL Plat Amex card.
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Old May 6, 2019, 8:05 am
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Originally Posted by ashill
DL Platinum status seems unlikely for someone based in LIT flying 12-18 times a year to destinations near the Mississippi and east, and DC and south. Even if flying "18 times a year" means 18 connecting round trips, that's only 72 segments or so, at least half of them <500 miles (to DFW or ATL) and the rest all less than 1000 miles each. That's going to be a long ways short of 75k status on both miles and segments (never mind spend).
My remark was preceded by an 'If'.

Delta offers both segment or mileage qualification at all four levels silver/gold/platinum/diamond, and has Delta Amex spend waivers for silver/gold/platinum (and a very steep $250K spend waiver to Diamond).
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