Delta Order Leaves Some Questions Open

[East New York]

 

 

 

Aviation Week - Delta Air Lines’ order for new single-aisle aircraft to renew its aging domestic fleet is almost as significant for what it omits as for what it includes.

 

The U.S. carrier announced an order on Aug. 25 for 100 Boeing 737-900ER (extended-range) airplanes to replace its older narrowbody aircraft from the second half of 2013 through 2018—an order with an $8.5 billion list price that will make Delta the second-largest 737-900ER operator in the world, behind only Indonesia’s Lion Air.

 

But that is just half the number of single-aisle replacements Delta said it was considering when it issued a request for proposals in late 2010. At that point, the airline talked about the “potential replacement” of 100-200 large, medium and small narrowbody aircraft, with options for as many as 200 more, to replace its Airbus A320s, DC-9-50s and Boeing 757-200s.

 

The decision to keep the order “modest,” as Delta CEO Richard Anderson puts it, gives the carrier more time to see how the market shakes out and technology shapes up for the smaller single-aisle aircraft it also will need. The move also keeps Delta on track in what has been a primary focus, reducing its adjusted net debt to $10 billion by 2013.

 

That debt, which stood at $17 billion in 2010, had declined to $13.8 billion by the end of June, and Delta executives emphasize their $10 billion goal at every opportunity. Each new aircraft has committed long-term financing, Delta says, and the size and timing of the order will allow it to maintain its annual capital expenditure run rate at $1.2-1.4 billion over the next three years.

 

After announcing the order, Delta declined to discuss future plans for the fleet, leaving the next steps open to speculation. Anderson has talked in positive terms about the Bombardier CSeries and Pratt & Whitney geared turbofan engine, but he could be waiting to see if they live up to their billing. Embraer has yet to decide whether to offer new, more efficient engines on its Embraer 190 and 195 E-Jets, which top out at 122 seats, or develop a new, larger aircraft, but it expects to choose this year.

 

“Not a great day for Bombardier,” Richard Aboulafia, vice president of the Teal Group, says of Delta’s deferred decision on a smaller narrowbody. “Its main advantage is its window of opportunity in having the next-generation single-aisle, and especially the next-generation small single-aisle.”

 

With Delta waiting, he says, “there is going to be an Embraer competitive response that uses next-gen engines.”

 

Paulo Cesar de Souza e Silva, Embraer president for commercial aviation, says he thinks Delta may put off its decision on a smaller narrowbody for at least a year.

 

The Airbus A320NEO (new engine option) or Boeing’s reengining plans for its 737, which are not yet clearly defined, also could figure into Delta’s future plans although it did not fit into the timetable for its more immediate needs. Delta’s 100-aircraft order “is not particularly aggressive,” notes analyst Craig Jenks, who says that a carrier with a mainline fleet of Delta’s size, about 725 aircraft, should be replacing 35 of them every year to keep the average aircraft age from rising.

 

Click here for the full story.

[BZGuy]

100 737-900ERs! That sounds like they have found a replacement for the domestic 757 fleet. Between the PMDL and PMNW fleets are some of the oldest units around.

 

The only problem I see with that order is the the -900 is not as flexible as the 757s ....I had expected more -800s, which IMHO the closest in the 737 family to the 75s performance.

[Nova RTS 9147]

Its not really surprising giving Delta's relationship with Boeing, though I have a feeling this is more for the high capacity medium range routes that the A320, DC-9s and some B757s do than to actually knock out all of the 757s (though this is just an educated guess).