Delta Mixes Old, New Jets in CEO’s Cost-Cutting Fleet Plan

Delta Air Lines Inc. (DAL) began adding a new variant of Boeing Co.’s 737 aircraft and a batch of used Boeing 717s, as the company uses the most diverse fleet in the U.S. industry to reduce operating costs.

The planes are part of a plan to revamp the second-largest U.S. airline’s domestic fleet and shave about $300 million a year from fuel and maintenance spending. The Atlanta-based carrier this year will add the first 12 of 100 737-900 extended-range models and 16 of 88 smaller 717s it’s leasing from Southwest Airlines Co. (LUV), said Anthony Black, a Delta spokesman.

Chief Executive Officer Richard Anderson’s strategy calls for a mix of fuel-efficient new aircraft and older or used planes that can be acquired at a lower price. The additions will replace less cost-efficient 50-seat regional jets being culled from its U.S. fleet, as well as Boeing 757-200s and DC-9s.

“Straight out of the box, a -900 versus a 25-year-old 757 has ongoing operating-cost benefits for the life of that airplane,” Nat Pieper, Delta’s vice president of fleet strategy and transactions, said in a telephone interview. “The gist of it is as simple as replacing inefficient aircraft with more efficient jets.”

Delta’s first 737-900ER was handed over to the airline Sept. 27, Black said yesterday in an e-mail. The initial 717 is set to arrive later this week. With the addition of those models, the carrier’s main fleet will have 12 different aircraft types, including three variants of the 737 and Boeing 767, and two versions each of the 757, 777 and Airbus SAS A330. The DC-9s are the oldest aircraft flown by Delta, with an average age of 35 years.

The fleet totaled 727 aircraft as of June 30.

Delivery Snags

The 737-900ERs, ordered in August 2011, are the largest version of the Boeing 737, which is the world’s most widely flown airliner. Delta will receive 737-900s, which seat 180 passengers, through 2018. The airline expects to begin flying the planes in commercial service by early November, Pieper said.

Delivery of the first 717 hit several snags, including a problem with tray tables in emergency-exit rows, during the final certification process involving the two airlines, vendors and the Federal Aviation Administration, Black said. The date for the 717’s first flight, originally set for Sept. 10, was delayed twice and now is planned for Nov. 1. Delta was able to substitute other planes for 717s in earlier flight schedules.

Southwest, AirTran

Southwest, which historically has flown only 737s, decided to shed the 717s about a year after it acquired them in its 2011 purchase of AirTran Holdings Inc. The Dallas-based carrier agreed to pay $100 million to convert the planes to Delta’s standards. The interiors were reconfigured and nine seats removed to provide a total of 110 in first, economy comfort and coach classes. Boeing stopped making the 717 in 2006.

“The first AirTran 717 converted to Delta specs received final FAA certification last week,” Southwest CEO Gary Kelly said in a message to employees today. “Delivery to Delta is imminent. I think that will happen this week.”

The delivery schedule for the planes “has fluctuated a bit as we get the retrofit going,” Whitney Eichinger, a Southwest spokeswoman, said of the delay in getting the first 717 to Delta.

Delta earlier this month bypassed the newest Airbus jets, instead ordering 40 older, cheaper models to secure lower purchase prices. The wide-body Airbus A330-300 and single-aisle A321 have been in production for two decades and are being supplanted by newer models. It was Delta’s second Airbus order ever, the last occurring 21 years ago.

To contact the reporter on this story: Mary Schlangenstein in Dallas at maryc.s@bloomberg.net

To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net

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