Delta Said to Plan Order of 100 Boeing Jets in Airbus Rebuff
Delta Air Lines Inc. (DAL) plans to order 100 Boeing Co. (BA) 737 single-aisle jets, a rebuff to Airbus SAS, as it refreshes its fleet with planes valued at $8.58 billion, two people familiar with the matter said.
Directors at Atlanta-based Delta will vote this week on the purchase of the 737-900 extended-range model, said one of the people, who wasn’t authorized to speak publicly. A decision on buying smaller narrow-body jets, such as Bombardier Inc. (BBD/B)’s CSeries, has been delayed past this week, three people said.
Winning the Delta deal is a boost for Boeing after losing its exclusive ties to American Airlines July 20 as the carrier divided a 460-plane order between the U.S. company and Toulouse, France-based Airbus. Delta had flown only Boeings until adding hundreds of Airbus planes by buying Northwest Airlines in 2008.
“If this order is just 100 planes, they don’t need to split it,” because one manufacturer can deliver that many jets, said Jeff Straebler, an aviation debt strategist at RBS Securities Inc. in Stamford, Connecticut.
Industry speculation that Airbus would be favored at Delta was fueled by the history of Chief Executive Officer Richard Anderson, who was Northwest’s CEO when that carrier bought more of the company’s models. Airbus also split an order with Boeing for wide-body jets from United Airlines in 2009.
Delta doesn’t comment on its plans for aircraft purchases, said Trebor Banstetter, a spokesman. John Dern, a spokesman for Boeing, and Airbus’s Martin Fendt declined to comment.
Boeing rose 84 cents, or 1.5 percent, to $58.38 at 4:01 p.m. in New York Stock Exchange composite trading, while Delta gained 1 cent to $7.22. Airbus parent European Aeronautic Defence & Space Co. added 32 cents, or 1.5 percent, to 21.09 euros in Paris.
The order would make Delta the second-largest customer for the 737-900ER, behind Indonesia’s Lion Air.
The jet can carry about 200 passengers, and is the largest version of the 737 family that is the world’s most widely flown airliner. The 737-900ER is powered by existing engines, not ones that Boeing said last month it is developing for a new variant of the 737 to compete with Airbus’s A320neo family.
“The 737-900ERs have a wide variety of things they can replace on domestic flying,” Straebler said in an interview.
Delta told employees in an internal website posting in January that it might start getting new narrow-body planes as soon as 2013, and buying a model from Boeing’s existing lineup may allow the airline to meet that schedule.
Boeing’s revamped 737s will start entering service in “mid-decade,” and AMR Corp. (AMR)’s American won’t start receiving its re-engined aircraft until 2018, the planemaker said last month.
New narrow-body jets would allow Delta to replace its oldest and least-efficient planes, including some Boeing 757s that average 18 years of age and MD-88s that are almost 21 years old. The 737-900ER has a list price of $85.8 million, according to Boeing’s website. Airlines typically buy at a discount.
Delta had said in January that it planned to buy 100 to 200 narrow-body jets and seek options for 200 more, with deliveries starting as soon as 2013.
The airline hasn’t made a decision on adding smaller narrow-body aircraft, such as Bombardier’s CSeries and a potential offering from Brazil’s Embraer SA (EMBR3), three people said. Embraer has yet to decide whether it will build a new plane or a version of its largest regional jet with new engines to compete with Montreal-based Bombardier’s offering.
Delta has been in talks with Bombardier and Embraer, two people familiar with that matter said.
John Arnone, a spokesman for Bombardier, declined to comment. Calls left for comment with Sao Jose Dos Campos, Brazil-based Embraer weren’t immediately returned.