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Delta is pursuing a maverick plan in bargain-shopping for single-aisle aircraft to replace its even older jets. There will be no advertising about having the youngest fleet in the industry.
Delta Air Lines Inc. is talking to Airbus SAS and Boeing Co. about buying $1 billion or more of new jets as the planemakers phase out their current single-aisle models, people familiar with the matter said.
The order would be at a deeper discount to retail prices than is customary, because Delta is studying current versions of the Airbus A320 and Boeing 737, not the newest variants, said one of the people, who asked not to be identified because the discussions are private. The talks are for an order of two dozen to 30 planes, the person said.
A deal of that size would have a book value of at least $1 billion, based on prices tracked by consultant Avitas of Chantilly, Virginia. New A320s or 737s would retail for about $2.8 billion, according to published figures from Airbus and Boeing, although airlines typically pay less.
Buying from planemakers’ existing lineups would fit Chief Executive Officer Richard Anderson’s strategy of finding less- expensive alternatives to refresh Delta’s fleet while unloading some of its oldest jets. He has bought used Boeing MD-90s and is subleasing 88 Boeing 717s from Southwest Airlines Co.
Delta is seeking an accord in which it would get new planes while having Boeing or Airbus take some of its 50-seat regional jets, similar to a deal with Bombardier Inc. in December, the person said. The airline ordered as many as 70 Bombardier jets with 76 seats and turned in 60 of its 50-seaters.
Anthony Black, a Delta spokesman, declined to comment on the airline’s jet plans. Marc Birtel, a spokesman at Boeing’s commercial headquarters in Seattle, declined to comment on conversations with customers, as did Mary Anne Greczyn, a U.S. spokeswoman for Toulouse, France-based Airbus.
Single-aisle planes such as the Airbus A320 and Boeing 737 are the workhorses of the global airline fleet, and seat about 150 passengers, depending on the model and how they’re configured.
New Boeing or Airbus single-aisle jets wouldn’t add to Atlanta-based Delta’s capacity, and deliveries would start in three to five years as planemakers wind down assembly of older models and shift to the newer aircraft, the person said.
Boeing’s upgraded 737 Max with improved engines lists for as much as $107.3 million, while the Airbus A320neo has a catalog price of $100.2 million. Anderson also bypassed those models in August 2011, when he ordered 100 Boeing 737-900ERs with a list price of more than $8.5 billion.
Getting rid of older aircraft is part of a $1 billion cost-cutting program at Delta, the world’s second-largest airline.
Delta had 565 single-aisle jets in its fleet as of September, three-fourths of them made by Chicago-based Boeing or companies it has acquired, according to the airline’s most recent quarterly regulatory filing.
The carrier also had 300 50-seat jets in its fleet as of December, and Anderson said on a Jan. 22 conference call that Delta has a “clear path” to shrink that figure to 100 to 125 within two years.
With assistance from Susanna Ray in Seattle and Robert Wall in London. Editors: Ed Dufner, James Langford. To contact the reporters on this story: Andrea Rothman in Dublin at firstname.lastname@example.org; Mary Jane Credeur in Atlanta at email@example.com. To contact the editors responsible for this story: Ed Dufner at firstname.lastname@example.org; Benedikt Kammel at email@example.com.