Delta Airlines Executive Summary

The airline industry do operates as a service industry in that it provides the customer transportation as well as their personal belonging by moving them from one destination to another for a charge. In order to provide this form of service, the airlines needs a huge amount of capital so as to purchase as well as maintain the expensive equipment and the facilities. The cash flow of the most airlines is generated from the profits as well as the depreciation of their airplanes.

The said cash flow is then used in repayment of debts and to buy new aircraft. Also, the airline industry is a very labor intensive industry since it?s in the service industry and also its customers do require some personal attention, this can be very expensive for the

airline industry remains beleaguered?out of favor with investors and often derided by consumers. But Delta stands apart. We have become consistently profitable, we are rewarding our employees and shareholders, and we are investing in providing the industry?s best customer service.

Delta has also unique people, culture, and strategy, which makes it stronger than ever. Every day the Delta team works with determination so as to apply the innovative thinking throughout the organization. For instance, it recently became the first major airline to switch to a dollars-spent, rather than the miles-flown, frequent-flier program. It has also aggressively pursued ancillary businesses, including the airplane maintenance, repair, and the overhaul; the private jet service; and vacation consolidation, and requiring them to be significant cash-flow generators.

While many of the Delta competitors are tying up their capital in the new airplanes, Delta has adopted an opportunistic fleet strategy that combines the new aircraft with the used jets that we refurbish and operate at a much lower overall cost. Delta was also the first airline to take steps to dramatically reduce the number of 50-seat aircraft in operation; they had become extremely inefficient when fuel costs

Is this offset by operation cost?

Delta?s thinking around the buying a refinery in Trainer, Pa. was aimed at helping it lower the biggest cost, which is the cost of the jet fuel. After shelling out about $150 million Delta Airlines was able to acquired Monroe Energy in Trainer, Pa. This acquisition was necessary so as to supply the jet fuel to its operations in the New York as well as in Boston. In the past, Delta would have spent money to buy the jet fuel so as to run its flights but as a result of having its own refinery it was able to flood the market with the jet fuel thus allowing its competitors to purchase the jet fuel at a lower price.

This resulted to fuel becoming more readily available hence, leading to the fall of the cost of the fuel. Being able to fuel its fleet at a lesser cost, it enabled Delta to make higher profits and lower operating costs. With the purchase of the Monroe oil refinery Delta has been afforded the ability to reduce its number one cost, which was fuel. This move is one only Delta has done thus far. The purchase of this refinery has drove down the costs for the airline industry as a whole as it made fuel to be more readily available thus, a drop in the prices across the