Indulge in Life in America

"Is this old guy reminding me of something?"

Yang Cheng had to doubt that Richard Anderson, as one of the most successful CEOs in Delta Air Lines history, could not remain indifferent in the face of the impending weakening of power.

When Yuanshan Capital takes over Delta Air Lines, Gerald Greenstein will voluntarily step down as the chairman of the board of directors. Although he is still on the board of directors, his power is not the same as that of the chairman of the board. It is naturally difficult to implement the two powers of the CEO. The separation policy, CEO Richard Anderson is bound to play within the framework set by the board of directors, which is indeed unacceptable to him who is used to freedom.

Therefore, he will euphemistically express the desire to follow the trajectory of success to himself and Yuanshan by going back to history and recalling success?

Yang Cheng admits that he is using the heart of a villain. As for whether he has saved the womb of a gentleman, he doesn't know, but in order to ensure that his own interests are not harmed, he can only look at the problem carefully.

Richard Anderson’s memories continue. The reporter friends in the audience listened very seriously. Most of them still have deep feelings for Delta Air Lines. After all, they are people who travel by plane all year round. Delta Air Lines is with them. A partner for many years. Therefore, accompanied by Richard Anderson’s urging speech, he unconsciously substituted into the emotional emotions, "In addition to the cooperation of employees, virtual mergers and vertical integration, it is how Delta Air Lines came back to life. key.

Delta Air Lines used to be unique in some key areas, such as asset management, international cooperation and supply chain.

Innovation is the tradition of this company. Our goal is to obtain higher efficiency and greater control. This is reflected in the withdrawal of the ticket reservation system. We no longer rely on third parties to manage data.

In the most important international aviation market, we have achieved virtual mergers with strong partners by investing in leading airlines in Brazil, Mexico and the United Kingdom.

Since ZF regulations do not allow airlines to obtain ownership of foreign airlines through cross-border mergers and acquisitions, it is very important for Delta to establish international cooperation through equity purchases. It provides our customers with a truly global network. "

Speaking of this, Richard Anderson noticeably paused, and gave Yang Cheng a deep glance, but Yang Cheng's expressionless and calm appearance really made him a little depressed.

Actually otherwise, Yang Cheng had already scolded her in her heart, "Bad son, no wonder you all prevented Lao Tzu from acquiring Korean Air. It turns out that there is still such a regulation."

Yang Cheng knew in his heart that he was harmed by the lack of experience, and blamed himself for arbitrarily calling the shots without knowing it clearly in advance. Fortunately, the devil’s height is one foot high and the other is one foot high. At the last minute, he gave up the absolute holding of Korean Air. It only requires a shareholding to occupy the seat of the largest shareholder, and the thief laughed, "Richard Anderson, I have recorded this battle."

Richard Anderson did not see the desired expression on Yang Cheng's face, and his depressed mood was beyond words, but he knew that he could not lose his temper now, and adjusted his mood in time. He coughed and continued, "In the past few years, Delta Aviation made what may be the most unusual action in aviation history-the acquisition of the Trainer refinery outside Philadelphia.

Aviation fuel has always been the largest expense in airline operating costs. This figure is particularly alarming for Delta Air Lines, spending as much as US$12 billion per year. We hope to provide a stable fuel supply for the company’s global business and find the best Practice method.

Previously, we had been using hedging, option strategies, and dynamic fares like our peers to protect ourselves from oil price fluctuations, but a few years ago, we decided to take a step forward. Instead of being controlled by oil producers, we are better off Enter the oil industry and gain control of the supply chain through vertical integration.

At that time, many oil refineries on the east coast were facing closures, and the reduction of oil refining capacity and the subsequent price increase made our costs even higher.

At first, we inspected an oil refinery in Louisiana, and the result was inappropriate, but we took a different approach and brought its manager and some team members under our command and started to build internal expertise. Later, the Trainer refinery came into our sight.

During my tenure, Delta Air Lines insisted not to do too much consulting. We believe that we know the company's business better than outsiders.

However, when acquiring a refinery, we hired consultants to help weigh the pros and cons, and finally came to the conclusion: If this refinery is closed or merged, our fuel costs will rise by 10%-15%; if we acquire it, fuel costs Will decrease.

And most importantly, the purchase price of this transaction is relatively reasonable, at about $150 million, which is similar to the price of a new Boeing 787.

Therefore, we decided to buy it. This move caused a stir in the aviation and petroleum industries, but it also convinced us of our choice-if our competitors, refineries, and oil monopoly alliances criticize us, it just shows us. The right choice was made.

Since then, we have further expanded our oil team and invited several crude oil traders and the former president of Total Petroleum's North American subsidiary to join us.

We have also leased a long-term ship to transport crude oil from the Gulf of Mexico to the east coast, so that we can achieve self-sufficiency while greatly reducing costs. When the company gains a foothold in the commodity business, we are in Purchasing, refining, and transporting fuel have also done more easily.

As an independent entity, the Trainer refinery has had meager profits in the past two quarters. But the real advantage it gives us is the impact on prices: Our average fuel cost per gallon in the past two years has been 5-10 cents lower than the industry. "

Yang Cheng sneered again and again. It seems that this old boy is determined to die. It is really one trick after another. First, he vaguely criticized the acquisition of Korean Air, and then targeted himself for purchasing oil from Abu and Conrad. The practice, giving negative teaching materials, is really well-intentioned, but it is a pity that his words are okay to fool reporters, such as amateurs, fool yourself? There are no doors.

Long before the official start of the acquisition of Delta Air Lines, Yang Cheng understood the fact that Delta Air Lines acquired the refinery in an attempt to reduce costs. However, did the refinery really reduce costs?

wrong! Wrong! Had it not been for Yang Cheng's detailed investigation, he might have been fooled by Richard Anderson's rhetoric.

Prior to this, in the history of aviation, no airline had its own refinery, but in 2012, Delta Air Lines took the lead in breaking this vicious circle. Delta Air Lines executives under the leadership of CEO Richard Anderson believe that With regard to the painful cost of fuel, it is time to do something radical.

During that time, oil prices were stubbornly high-more than $90 a barrel, while the daily fuel consumption of Delta Air Lines aircraft was equivalent to 260,000 barrels of oil, which accounted for one-third of the company's total costs.

Delta Air Lines calculated that $2.2 billion of the $12 billion spent on fuel each year became the profit of the refinery. This made Richard Anderson and his team feel that if the company’s own refinery produces jet fuel, Then, you can keep that part of the profit for yourself.

So, they spent $180 million (this is the true figure, not the $150 million Richard Anderson said in his speech) to purchase the Trainer refinery near Philadelphia, Pennsylvania.

Do you think this is all there is to it? wrong! In the next two and a half years, Delta Air Lines invested heavily in this refinery of up to 420 million U.S. dollars, and the result was a loss of about 100 million U.S. dollars.

But many people want to say that Delta Air Lines at least has cheap jet fuel, right? The result is not so.

Before the acquisition of this refinery, the supply of Delta Airlines jet fuel was 9 cents per gallon lower than that of its peers. So, what is the advantage today? It's still 9 cents! At the same time, most of the reasons for acquiring an oil refinery have now disappeared: oil prices have fallen sharply, while the profitability of the refinery’s jet fuel production has gone from bad to worse.

This is the truest side, far from being as beautiful as Richard Anderson said!

From an economic point of view: Even if you manage this company as well as others, the opportunity cost of jet fuel still depends on the global market ~www.wuxiaspot.com~ and only if you run it better than others When you are a company, your acquisition is meaningful, but for an airline, such a requirement is a little difficult.

Unfortunately, Richard Anderson didn't realize it, or they knew it but didn't want to admit their fault.

What is going wrong?

Basically all links have problems!

But the biggest problem is that buying a refinery is not an ideal way to hedge against fuel price risks. Why do you say that? Because the real cost of jet fuel lies in petroleum, not in the refining process.

For example, this mistake is like buying a bakery to resist rising bread prices. If you really want to hedge the price risk of bread, you should buy a wheat field.

Similarly, if these guys want to withstand the risk of fuel prices, they should buy oil fields. Thanks to the collapse of oil prices, there are now countless oil fields for sale worldwide.

Of course, considering the experience of the Trainer project, it may not be a good idea to buy oil fields. With hindsight, Delta waits for oil prices to fall and then locks in low jet fuel prices in the futures market. The result will be better.

But Richard Anderson’s decision led to Delta Air Lines being dragged down by an expensive baggage. However, judging from Richard Anderson’s speech just now, he still stubbornly believes that this refinery is a very cost-effective investment. It is also regarded as part of the overall strategy-to proactively prevent the fluctuation of jet fuel prices, rather than becoming a victim of violent fluctuations in the global energy market.

It's just that, in Yang Cheng's eyes, the idea of ​​concealing the ears and stealing the bell is completely stupid, and it has strengthened his idea of ​​cleaning after taking over Delta Air Lines!

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