Delta Airlines 2015 Annual Report Download - page 8

TableofContents
Fuel
Ourresultsofoperationsaresignificantlyimpactedbychangesinthepriceandavailabilityofaircraftfuel.Thefollowingtableshowsouraircraftfuel
consumptionandcosts.
Year
GallonsConsumed(1)
(inmillions) Cost(1)(2)(inmillions)
AveragePricePer
Gallon(1)(2)
PercentageofTotal
OperatingExpense(1)(2)
2015 3,988 $ 7,579 $ 1.90 23.0%
2014 3,893 $ 13,512 $ 3.47 35.4%
2013 3,828 $ 11,464 $ 3.00 33.3%
(1) Includestheoperationsofourregionalcarriersoperatingundercapacitypurchaseagreements.
(2) Includestheimpactoffuelhedgeactivityandrefinerysegmentresults.
General
Wepurchasemostofouraircraftfuelundercontractsthatestablishthepricebasedonvariousmarketindicesandthereforedonotprovidematerialprotection
againstpriceincreasesorassuretheavailabilityofourfuelsupplies.Wealsopurchaseaircraftfuelonthespotmarket,fromoff-shoresourcesandundercontracts
thatpermittherefinerstosettheprice.
Monroe Energy
Ourwholly-ownedsubsidiaries,MonroeEnergy,LLCandMIPC,LLC(collectively,“Monroe”)operatetheTrainerrefineryandrelatedassetslocatednear
Philadelphia,Pennsylvania.Thefacilitiesincludepipelinesandterminalassetsthatallowtherefinerytosupplyjetfueltoourairlineoperationsthroughoutthe
NortheasternU.S.,includingourNewYorkhubsatLaGuardiaandJFK.Thesecompaniesaredistinctfromus,operatingundertheirownmanagementteamsand
withtheirownboardsofmanagers.
WeownMonroeaspartofourstrategytomitigatethecostoftherefiningmarginreflectedinthepriceofjetfuel,aswellastomaintainsufficiencyofsupply
toourNewYorkoperations.TheU.S.governmentrecentlyreversedabanoncrudeoilexportsfromtheU.S.Thispolicyreversalwillplacepressureonrefinersin
theNortheasternU.S.ThepossibilitythatsomerefineriesintheNortheasternU.S.mayclosereinforcesthereasonsforMonroetooperatetheTrainerrefinery.
RefineryOperations.Thefacilityiscapableofrefining195,000barrelsofcrudeoilperday.Inadditiontojetfuel,therefinery'sproductionconsistsof
gasoline,dieselandotherrefinedproducts(“non-jetfuelproducts”).Monroesourcesdomesticandforeigncrudeoilsupplyfromavarietyofproviders.
StrategicAgreements.Monroeexchangessubstantiallyallthenon-jetfuelproductstherefineryproduceswiththirdpartiesforjetfuelconsumedinourairline
operations.
Segments.BecausetheproductsandservicesofMonroe'srefineryoperationsarediscretefromourairlineservices,segmentresultsarepreparedforourairline
segmentandourrefinerysegment.FinancialinformationonoursegmentreportingcanbefoundinNote14oftheNotestotheConsolidatedFinancialStatements.
Fuel Hedging Program
Weactivelymanageourfuelpriceriskthroughahedgingprogramintendedtoreducethefinancialimpactfromchangesinthepriceofjetfuel.Weutilize
differentcontractandcommoditytypesinthisprogramandfrequentlytesttheireconomiceffectivenessagainstourfinancialtargets.Wecloselymonitorthehedge
portfolioandrebalancetheportfoliobasedonmarketconditions,whichmayresultinlockingingainsorlossesonhedgecontractspriortotheirsettlementdates.
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