Welcome to The Business Buying Academy with Sieva Kozinsky.

🔑 Airlines buying hotels, oil refineries, and even pest control businesses

What's the world's largest airline?

The answer is complicated.

It depends on which metric you use.

If you prefer financial measures like revenue, profit, and market cap, the largest airline is Delta.

If you think number of passengers carried annually is the best measure, then the answer is American Airlines.

And if you look at total fleet size or an airline industry metric called Available Seat Miles, then United is the winner there.

Either way, one of the world's three largest airlines has a fascinating history.

It's easy to forget that aviation is a young industry.

Many of today's giant, multi-billion dollar airlines have humble beginnings in different businesses than the ones they're known for today.

Today, Delta is worth $57 billion.

But we're going to look at how the business started 100 years ago as a regional pest control service and eventually grew into the business we know today through a series of surprising acquisitions.

The story of Delta Airlines begins not at an airport, but in a farm field in Georgia.

In 1925, Huff Daland Dusters was founded in Macon, Georgia as the world’s first commercial aerial crop-dusting company.

It operated a fleet of 18 planes, the largest privately owned fleet at the time (this was before passenger air travel).

Farmers paid them to fight boll weevils and other pests.

1928, C.E. Woolman (often called Delta’s founder) led a group of local investors to acquire the assets of Huff Daland Dusters.

They renamed it Delta Air Service, honoring the Mississippi Delta region in Louisiana, its new HQ.

Air mail service was the primary way to make money with airplanes in the 20s.

But Delta had a different - and bold idea.

They took a risky bet on passenger air service in 1929.

It went terribly at first.

No one wanted to fly thousands of feet in the air.

And the launch of the new business couldn't have been worse, as the Great Depression forced a temporary suspension of airline operations from 1929 to 1934.

But the company survived.

And in the late 1930s and 40s when passenger travel become more feasible, Delta was well-positioned to be one of the industry leaders.

Growth Through Mergers

Delta’s expansion relied heavily on acquisitions of regional airlines as the industry matured and a few national powers emerged.

• 1953: Merger with Chicago and Southern Air Lines, adding key international routes.
• 1972: Acquisition of Northeast Airlines, which added Northeast US to Florida routes.
• 2008: The blockbuster ~$3 billion stock acquisition of Northwest Airlines, creating the world’s largest carrier at the time with massive route synergies. Northwest operated as a subsidiary during integration.

These were the standard acquisitions that we'd expect from an airline; add other regional airlines to expand into a national footprint.

But Delta had some less conventional deals.

Vertical Integration

In April 2012, Delta (via wholly owned subsidiary Monroe Energy) made a highly unconventional acquisition: the Trainer oil refinery complex in Trainer, Pennsylvania, along the Delaware River, purchased from Phillips 66.

Key financial details:

• Purchase price: $180 million total ($150 million from Delta/Monroe + $30 million in Pennsylvania state assistance for jobs/infrastructure).
• Additional capex: ~$100 million for upgrades to maximize jet fuel production (~40% of output targeted as jet fuel).
• Refinery capacity: 185,000–208,000 barrels per day (bpd), with pipelines and transport assets feeding Delta’s Northeast hubs (JFK, LaGuardia).

At the time, fuel was ~36% of Delta’s operating expenses (~$11.8 billion in 2011 amid high oil prices).

CEO Richard Anderson said the move could deliver savings equivalent to buying ~60 new smaller aircraft.

Projected benefits included more than $100 million in initial savings and ~$300 million annually in run-rate fuel cost reductions by capturing refining margins, and optimizing logistics.

The refinery restarted in September 2012. Results have been mixed but often positive:

• It has supplied 40–50% of Delta’s domestic jet fuel needs in various periods.
• In volatile times (2022–2026 oil market disruptions), it generated hundreds of millions in benefits. In Q2 2026 alone, it provided a ~$300 million offset amid high prices.
• Full-year refinery contributions have reached ~$1.4 billion in recent reports, with per-gallon benefits of 4–11 cents.

Other Airlines’ Vertical Integration Attempts

No other airline has bought its own oil refinery.

But other airlines have experimented with vertical integration for control over costs and supply chains.

A few examples:

• Many carriers owned or controlled MRO (maintenance, repair, overhaul) facilities. Pan Am and TWA invested heavily in their own tech and engine shops in the mid-20th century for self-reliance on long-haul routes.
• Catering and Ground Services: Airlines frequently integrated or owned catering arms. American Airlines and Lufthansa purchased their own catering subsidiaries, for example.
• Conglomerate-Style Holdings: In the 1960s–1970s, some airlines (under holding structures) diversified into hotels, car rentals, or even unrelated businesses to smooth cyclical earnings. For example, United Airlines once owned Westin Hotels and Hilton International for a brief time in the 80s.

Sieva

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Disclaimer: nothing here is investment advice. Please do your own research. The information above is just for information and learning.