* Delta sees at least breakeven results from Trainer in Q4
* Delta sees quick payback at refinery
NEW YORK, Oct 24 (Reuters) - Delta Air Lines said on Wednesday it expects operations at its 185,000 barrel per day refinery in Trainer, Pennsylvania to break even or be cash positive during the fourth quarter, the company said at its earnings call on Wednesday.
Monroe Energy, a Delta subsidiary that owns the refinery, is doing massive maintenance work at the plant, which includes increasing jet fuel production to about 50,000 bpd at the expense of other transport fuels like gasoline.
Delta, the nation's second-largest air carrier, said it expects Monroe to break even or even make a $25 million contribution to its parent's coffers in the December quarter.
The company said it expects the refinery to be at full production in the first quarter of 2013. Jet fuel production from the plant began in September.
When Delta made the bold buy of the refinery from Phillips 66 in the spring in an effort to manage fuel costs, it said it expected to save about $300 million annually off its $12 billion yearly fuel bill - one of its largest expenses.
"We still feel confident in our $300 million target," said Paul Jacobson, Delta's chief financial officer.
"It has more to do with the relationship between all the products that are produced at the refinery. But in spite of the volatility that we've seen, we remain confident in achieving that over the long-term."
The $300 million in savings was predicated on a $16 jet fuel crack spread -- or the amount of profit refiners make from processing a barrel of crude into jet fuel.
However, the payback may be quicker as the profit margin for making jet fuel from the more Brent-quality expensive light, sweet imported crude the refinery currently runs is now about $20 a barrel.
Cracks off the less expensive U.S. West Texas Intermediate is currently about $42 a barrel. Trainer is looking to increase its processing of the cheaper domestic crudes to hasten profitability.
"There is no question there's upside to the number, depending on what crack spreads are. And we built our case on a conservative basis. And we think the refinery is going to be a very quick payback," Jacobson said.
Monroe Energy has an agreement with BP to supply crude and a product offtake agreement with Phillips 66, which will trade gasoline and other products from the refinery for jet fuel.