Delta looking at 24-30 more narrowbody orders? Article

[General Lee]

Delta Said to Talk With Airbus, Boeing on Jet Purchase


By Andrea Rothman & Mary Jane Credeur - Jan 23, 2013 4:06 PM MT

Delta Airlines is talking to Airbus and Boeing 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 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 Bertel, 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.
Industry Workhorses

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.


To contact the reporters on this story: Andrea Rothman in Dublin at Mary Jane Credeur in Atlanta



Bye Bye---General Lee

 

[General Lee]

I did think this part of the article was interesting:



"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 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."


It really does seem like DL wants to get rid of those 50 seat jets, and fast.


Bye Bye---General Lee

 

[jetflier]

It sure sounds like this was part of the original plan, using the RJ as a bargaining chip to squeeze a better deal from Boeing or Airbus.

Interesting that the article does not mention that DAL wants to acquire more 76 seaters.

 

[Saluki Dawg]

Are you guys looking at getting new or used 737/A320's. RA could be interpreted as being interested in either, but I doubt you would save that much over buying new, especially as Boeing winds down the NG, they will be desperate to keep the current line going until the MAX starts to deliver. Either way, good news for Delta.

 

[General Lee]

Are you guys looking at getting new or used 737/A320's. RA could be interpreted as being interested in either, but I doubt you would save that much over buying new, especially as Boeing winds down the NG, they will be desperate to keep the current line going until the MAX starts to deliver. Either way, good news for Delta.

I think they are looking at both new and used. This article talks about 24-30 new planes "before" the manufacturer switches over to the "new" NEOs on the production line. But, after reading what was stated in the conference call, they may be looking at more used planes as well. I'd really like to see some new or used widebodies show up, but so far that hasn't been the case.



Bye Bye---General Lee

 

[General Lee]

It sure sounds like this was part of the original plan, using the RJ as a bargaining chip to squeeze a better deal from Boeing or Airbus.

Interesting that the article does not mention that DAL wants to acquire more 76 seaters.

It's in one of the paragraphs:

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 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.



Bye Bye---General Lee

 

[GogglesPisano]

The much-awaited Widebody Order

Look for an order for up to 20 777-300ER's to replace the whales within 12 months.

We will either commit to more 787's or go with the A350 to replace the 767's within the same timeframe.

From a reliable source*





























*(reliable source is a mouse on the 4th floor that can leaves me messages scrawled on a whiteboard at night.)

 

[bri5150]

I did think this part of the article was interesting:



"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 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."


It really does seem like DL wants to get rid of those 50 seat jets, and fast.


Bye Bye---General Lee

Which is why you shouldn't have given up 70 seat scope to park 50 seaters. They would have been parked without giving up the 70 seat scope.

 

[General Lee]

Which is why you shouldn't have given up 70 seat scope to park 50 seaters. They would have been parked without giving up the 70 seat scope.

No, most of the 50 seaters had leases through 2015 or beyond. Had there been no deal, then many of those 50 seaters could have stayed put, and then adding 717s would have added too many seats to the market. Dumping 50 seaters (with deals through Bombardier for new CR9s and maybe Boeing or Airbus to take additional 50 seaters) allows for fewer seats and the CR9s and CR7s to cover for the outgoing 50 seaters, and 717s to cover for CR9s or CR7s. It is upgauging while not having extra planes parked while paying the leases.

It worked out well for everyone, including Regional pilots who may get hired thanks to the 717s. Delta is happy, they get planes on routes that might be able to make money compared to the 50 seaters (CR9s). It helps the manufacturers, who get orders for planes while getting a deduction for taking old CR2s as a trade. It helps mainline pilots, more Capt slots at a good wage on the 717, and eventual new hires. It helps passengers, they get larger planes with a first class option (CR9s in place of 50 seaters, and larger 717s instead of CR9s to some city pairs). It even helps SWA, who didn't want the second plane type, even though they have to pay around $100 million to refurbish the 717s prior to delivery. Not bad.



Bye Bye---General Lee

 

[Monster Buck]

Look for an order for up to 20 777-300ER's to replace the whales within 12 months.

We will either commit to more 787's or go with the A350 to replace the 767's within the same timeframe.

From a reliable source*





























*(reliable source is a mouse on the 4th floor that can leaves me messages scrawled on a whiteboard at night.)

Anything is possible but we just dumped millions into the whales interior. I'm not so sure I believe they are leaving anytime soon.

 

[GogglesPisano]

I believe I read some blurb that claimed they will stay until 2018-20. When the Asians start parking them (and Singapore, and JAL have) then you know their days are numbered.

 

[BILL LUMBERG]

A321s.....

Any bets?

 

[GogglesPisano]

I'm surprised we still fly both 737's and A320's. I can't see Tech Ops liking two different fleet types for the same mission. We're likely to pick one or the other going forward (and it looks like it's the 737.)

 

[jynxyjericho]

From a reliable source*









*(reliable source is a mouse on the 4th floor that can leaves me messages scrawled on a whiteboard at night.)

Do you solve the equations while mopping the floor (Good Will Hunting reference)

 

[KarmaPolice]

Hey guys,

Look at the timing on this. What else is big in our world in 3 years? Right, contract negotiations.

The 717 deal worked great for more 76 seaters, is this the way they get a few more out of us?

 

[jynxyjericho]

Hey guys,

Look at the timing on this. What else is big in our world in 3 years? Right, contract negotiations.

The 717 deal worked great for more 76 seaters, is this the way they get a few more out of us?

No, not at all. I have it on good authority that Delta pilots won't sell out one more bit of scope on 76 seaters this time.

 

[General Lee]

Hey guys,

Look at the timing on this. What else is big in our world in 3 years? Right, contract negotiations.

The 717 deal worked great for more 76 seaters, is this the way they get a few more out of us?

You are ONLY looking at the 70 76 seaters, and forgetting about the 200 plus 50 seaters that by contract have to be GONE. So, lower number of TOTAL RJs. Then the remaining 70 and 76 seaters will have to cover the city pairs the outgoing 50 seaters were serving. That is good for everyone, more seats and maybe more profits on those routes during high oil. Then remember that those 88 717s will fill in for the 76 seaters, on routes that used to be mainline and SHOULD be mainline, maybe some like DTW to IAH or DFW. That is GOOD. DL pilots recaptured a lot of old mainline routes with this contract, and put larger RJs on routes that 50s do now.


Bye Bye---General Lee

 

[General Lee]

No, not at all. I have it on good authority that Delta pilots won't sell out one more bit of scope on 76 seaters this time.

Unless it reduces overall RJ numbers and finally takes back a huge amount of current Surge 9 RJ routes....


Bye Bye---General Lee

 

[Freebrd]

you'll cave Jenny, once again

 

[KarmaPolice]

So if the company says they will buy 40 used 737s, how many more 76 seaters will you give them GL? They got 70 more for 88 717s.

And yes. I agree the 50s going was in our favor, however I still think my no vote was the right decision for me. I would like to fight for 76 seaters to fly at mainline. No legacy is doing it, but it's got to start somewhere.

 

[jynxyjericho]

Unless it reduces overall RJ numbers and finally takes back a huge amount of current Surge 9 RJ routes....


Bye Bye---General Lee

Phhtt! You're talking routes and total RJ numbers? Look around Genny, the CRJ-900 is a DC-9-10. When management is done there won't be any RJ's, just a lot of DC-9 replacements flying at the regional's. Furthermore what do you care what route it is? You're saying you'd sell out some more scope if you liked the route, or the CRJ-900 is bad only because it's taking a few routes you want back? If you were flying the stupid thing you'd have the routes.

This is old ground, and you're in your bubble, so I won't waste my breath. Just understand you aren't convincing anyone.

 

[FDJ2]

Hey guys,

Look at the timing on this. What else is big in our world in 3 years? Right, contract negotiations.

The 717 deal worked great for more 76 seaters, is this the way they get a few more out of us?

Actually, it's not more 76-seaters, it's more older 70-seaters that C2012 authorized.

Here's a math problem. Delta's SEC filing states that the mainline will grow to 796 aircraft by the end of 2015, up from approx. 720 when C2012 was signed. With that number of mainline aircraft, what's the maximum number of authorized 76-seat jets the JCBA allowed and what's the maximum number of authorized 76-seat jets with C2012?

 

[xjhawk]

"worked out well for everyone....jobs for regional pilots...."

Dude, you're serious?. ALPA, Pinnacle, and Delta made a deal that could be like dry ice. Its there now but after a while at room temp it will disappear. Oh and even more like dry ice is that it is cold and burns your hand when you touch it. Do you think an interview at Delta where the standards of hiring can change at the whim of Delta specifically for Pinnacle pilots is an even trade for a down grade and this terrible contract with its ridiculous pay and length? Provisions specifically put in there that Delta pulls all the promised aircraft if we vote out ALPA or in 7 years try to get a pay raise! There are so many things wrong here that it would take too much time to go into.

That Delta ALPA and ALPA National in return for pay raises and profit sharing set up Delta to purge fellow union jobs. Yes, they made that joke of a provision that 35% of all hiring will be ALPA DCI pilots-I would think that historically this was always the case. Then to get the contract at pinnacle pushed through they offer the "bridge agreement" that if am not mistaken will exclude many but will most likely pull most of Pinnacles union leadership in the first year. I am just assuming that will be the case. AS a former Mesaba captain I was a couple hundred away from the flow we used to have and now I am over 1,100. Forgive me if I am skeptical if I will ever see an interview in the next couple years (the union says 3-4 years) while my calculations at 12 a class (delta will not hire till 2014) it will be 7 years. Oh add that in the seniority list integration ALPA was so awesome to not have a fair and reasonable merger process that I lost half my seniority and will be downgraded and those shiny new jets going to pinnacle will be filled by Colgan pilots who apparently according to ALPA had a higher career expectation than a lot of Mesaba captains so therefore got gifted my seniority (those colgan turbo props could still be on property flying for United at decent rates if it were not for DELTA!). Thanks ALPA-guess what? Colgan never had one jet and now has zero turbo props (thanks to Delta). Between ALPA and Delta looking out for my well being I guess I have nothing to worry about. Yes, I am bitter. Yes I am preparing for my future but I do not think it will have anything to do wearing a hat and a double breasted jacket. If I get the chance at an interview out of seniority order I will do my best in my interview and hopefully my professionalism will show through and my military background as an officer will account for something. Delta treats its pilots great there is no denying that. But for wholly owned subsidiaries they are ruthless.

 

[KarmaPolice]

Actually, it's not more 76-seaters, it's more older 70-seaters that C2012 authorized.

Here's a math problem. Delta's SEC filing states that the mainline will grow to 796 aircraft by the end of 2015, up from approx. 720 when C2012 was signed. With that number of mainline aircraft, what's the maximum number of authorized 76-seat jets the JCBA allowed and what's the maximum number of authorized 76-seat jets with C2012?

I don't follow you. Please explain.

 

[KarmaPolice]

"worked out well for everyone....jobs for regional pilots...."

Dude, you're serious?. ALPA, Pinnacle, and Delta made a deal that could be like dry ice. Its there now but after a while at room temp it will disappear. Oh and even more like dry ice is that it is cold and burns your hand when you touch it. Do you think an interview at Delta where the standards of hiring can change at the whim of Delta specifically for Pinnacle pilots is an even trade for a down grade and this terrible contract with its ridiculous pay and length? Provisions specifically put in there that Delta pulls all the promised aircraft if we vote out ALPA or in 7 years try to get a pay raise! There are so many things wrong here that it would take too much time to go into.

That Delta ALPA and ALPA National in return for pay raises and profit sharing set up Delta to purge fellow union jobs. Yes, they made that joke of a provision that 35% of all hiring will be ALPA DCI pilots-I would think that historically this was always the case. Then to get the contract at pinnacle pushed through they offer the "bridge agreement" that if am not mistaken will exclude many but will most likely pull most of Pinnacles union leadership in the first year. I am just assuming that will be the case. AS a former Mesaba captain I was a couple hundred away from the flow we used to have and now I am over 1,100. Forgive me if I am skeptical if I will ever see an interview in the next couple years (the union says 3-4 years) while my calculations at 12 a class (delta will not hire till 2014) it will be 7 years. Oh add that in the seniority list integration ALPA was so awesome to not have a fair and reasonable merger process that I lost half my seniority and will be downgraded and those shiny new jets going to pinnacle will be filled by Colgan pilots who apparently according to ALPA had a higher career expectation than a lot of Mesaba captains so therefore got gifted my seniority (those colgan turbo props could still be on property flying for United at decent rates if it were not for DELTA!). Thanks ALPA-guess what? Colgan never had one jet and now has zero turbo props (thanks to Delta). Between ALPA and Delta looking out for my well being I guess I have nothing to worry about. Yes, I am bitter. Yes I am preparing for my future but I do not think it will have anything to do wearing a hat and a double breasted jacket. If I get the chance at an interview out of seniority order I will do my best in my interview and hopefully my professionalism will show through and my military background as an officer will account for something. Delta treats its pilots great there is no denying that. But for wholly owned subsidiaries they are ruthless.

Not to be rude, but you sound like a girl complaining that her "booty call" dumped her. The way Delta treats DCI, it's not personal, it's just business. You knew what you were getting yourself into when you signed up for that job. The corporation you work for used you because they knew YOU were using them, and would leave them as soon as a better gig came along. Both of you were using the other as a means to different ends. You wanted a shortcut to the majors and they wanted to do some expensive flying on the cheap. You can't cry foul at this point.

 

[KarmaPolice]

DCI had way too many 50s and Anderson knew it and was going to take care of it. They were going no matter what, it was just a question of HOW. Anderson gambled that we'd let him have more 76 seaters for DCI if he gave us the 717s. Brilliant move, because it gave the company what it needed on two levels at once.

We as a pilot group could've used our leverage and forced the company to bring a lot more of the flying onto mainline than we did. I don't think Anderson would've risked a war over scope because of the economic climate and what he wanted to accomplish. Obviously we'll never know.

With future aircraft orders and growth, why wouldn't we have to give equivalent growth of flying to DCI if we grow mainline? C2012 has clearly established that precedent with block hour ratios. I just hope we do better next time.

 

[General Lee]

So if the company says they will buy 40 used 737s, how many more 76 seaters will you give them GL? They got 70 more for 88 717s.

And yes. I agree the 50s going was in our favor, however I still think my no vote was the right decision for me. I would like to fight for 76 seaters to fly at mainline. No legacy is doing it, but it's got to start somewhere.

They already would have the order, and they can't place them anywhere else. You don't have to give anymore RJs. Those new planes are replacements, not totally new "100 seater" like the 717 that directly replaces CR9s while they cover for exiting 50 seaters. I think you are focusing on the wrong thing here. Yes, 70 more 76 seaters were allowed in exchange for 88 717s and the parking of 200 plus 50 seaters. But, if DL orders 20 777-300s, do RJs have to be involved? No. Why do they have to be involved with 24-30 A320s or 737s? They don't.

And Freebrd better catch a ride back to Vietnam pretty quick, his friend Danhi demands it!


Bye Bye---General Lee

 

[General Lee]

Phhtt! You're talking routes and total RJ numbers? Look around Genny, the CRJ-900 is a DC-9-10. When management is done there won't be any RJ's, just a lot of DC-9 replacements flying at the regional's. Furthermore what do you care what route it is? You're saying you'd sell out some more scope if you liked the route, or the CRJ-900 is bad only because it's taking a few routes you want back? If you were flying the stupid thing you'd have the routes.

This is old ground, and you're in your bubble, so I won't waste my breath. Just understand you aren't convincing anyone.

I don't need to convince you, but you know it is the truth. Your company and others initially got your Surge 9s thanks to DL's BK problems, and during that time pilot contracts were changed while the judge watched (you probably know that by now). It's not fun. The key part here is that a large portion of your flying will go away with the 50 seaters, but the routes won't, meaning your Surge 9s will start flying to those city pairs, trying to squeeze a profit where the 50s could not due to higher gas. Even RA stated in an article that 50 seat RJs shouldn't be flying from ATL to Buffulo, rather ATL to Albany, GA. So, remaining 50 seaters will be doing that, and other current 50 seat markets will see your Surge 9s. Then typical current Surge 9 routes will finally once again see mainline equipment, like they did back when those DC9-10s used to fly the skys.

You seem to not understand what passengers want, or what management seems to want now. Not many people like those 50 seaters, especially management. The 717s were a great deal, and they will take back routes that mainline should have had all along. Other managements might not have cared, but the current one does, and they are handling your own situation, so I would pay attention, even in your own bubble. Good luck.



Bye Bye---General Lee

 

[General Lee]

"worked out well for everyone....jobs for regional pilots...."

Dude, you're serious?. ALPA, Pinnacle, and Delta made a deal that could be like dry ice. Its there now but after a while at room temp it will disappear. Oh and even more like dry ice is that it is cold and burns your hand when you touch it. Do you think an interview at Delta where the standards of hiring can change at the whim of Delta specifically for Pinnacle pilots is an even trade for a down grade and this terrible contract with its ridiculous pay and length? Provisions specifically put in there that Delta pulls all the promised aircraft if we vote out ALPA or in 7 years try to get a pay raise! There are so many things wrong here that it would take too much time to go into.

That Delta ALPA and ALPA National in return for pay raises and profit sharing set up Delta to purge fellow union jobs. Yes, they made that joke of a provision that 35% of all hiring will be ALPA DCI pilots-I would think that historically this was always the case. Then to get the contract at pinnacle pushed through they offer the "bridge agreement" that if am not mistaken will exclude many but will most likely pull most of Pinnacles union leadership in the first year. I am just assuming that will be the case. AS a former Mesaba captain I was a couple hundred away from the flow we used to have and now I am over 1,100. Forgive me if I am skeptical if I will ever see an interview in the next couple years (the union says 3-4 years) while my calculations at 12 a class (delta will not hire till 2014) it will be 7 years. Oh add that in the seniority list integration ALPA was so awesome to not have a fair and reasonable merger process that I lost half my seniority and will be downgraded and those shiny new jets going to pinnacle will be filled by Colgan pilots who apparently according to ALPA had a higher career expectation than a lot of Mesaba captains so therefore got gifted my seniority (those colgan turbo props could still be on property flying for United at decent rates if it were not for DELTA!). Thanks ALPA-guess what? Colgan never had one jet and now has zero turbo props (thanks to Delta). Between ALPA and Delta looking out for my well being I guess I have nothing to worry about. Yes, I am bitter. Yes I am preparing for my future but I do not think it will have anything to do wearing a hat and a double breasted jacket. If I get the chance at an interview out of seniority order I will do my best in my interview and hopefully my professionalism will show through and my military background as an officer will account for something. Delta treats its pilots great there is no denying that. But for wholly owned subsidiaries they are ruthless.

You are confusing. Who are you mad at? Arbitrator Bloch? He is the one who heard your case and decided who went where. What did ALPA have to do with that? How about when nobody else would give your company DIP financing after the BK? Normally that would have lead to liquidation, but DL needed your feed still (for the time being), and then allowed you to survive. The terms might not have been great, but you ran out of choices. Why didn't another DCI carrier come in and help? Nobody else did. It seems like you were in a corner, without any other options.

As far as hiring goes, I hope you do get an interview and I hope you get hired. Just try to keep in perspective how your company got to it's current location, and who is really at fault. BK is never fun, and plenty on this board have also gone through it too.



Bye Bye---General Lee

 

[General Lee]

DCI had way too many 50s and Anderson knew it and was going to take care of it. They were going no matter what, it was just a question of HOW. Anderson gambled that we'd let him have more 76 seaters for DCI if he gave us the 717s. Brilliant move, because it gave the company what it needed on two levels at once.

We as a pilot group could've used our leverage and forced the company to bring a lot more of the flying onto mainline than we did. I don't think Anderson would've risked a war over scope because of the economic climate and what he wanted to accomplish. Obviously we'll never know.

With future aircraft orders and growth, why wouldn't we have to give equivalent growth of flying to DCI if we grow mainline? C2012 has clearly established that precedent with block hour ratios. I just hope we do better next time.

A lot depended on the contract, obviously. If it was turned down, the 717s might NOT have been coming due to the fact that there would be too many seats. I would think management saw two different options, take the 717s and dump the 50s and fly the 717s on current 76 seat routes, or let SWA keep the 717s, a fleet they didn't want, and choke on them until their leases expired, some of which were after 2020.

The 50 seaters were up for some expensive MX checks, but over 300 had leases that went through 2015. That means keeping them until then, either doing the MX or parking them and still paying for them. The contract allowed DL to try to bargain them away inexchange for FEWER larger RJs, but also getting 717s to cover the 76 seat routes while those planes covered the outgoing 50 seat routes. If the 50s couldn't make money due to the high gas prices, maybe an RJ could with first class seats. So, larger planes on certain routes (still have 125 50 seaters), have more profit potential, which is good for everyone.

As far as future block hour ratios goes, what will happen in the next 3 years? New fatigue rules and hiring rules at the regionals, which will affect them greatly, making them less efficient. Then add eventual huge retirement numbers at mainline, and I see a group with an advantage. I doubt the ratio will go backwards, rather more in favor of mainline. There will be years where 700 pilots will retire at age 65. Do you know how much training that means? How much flexibility will management need to facilitate that? It will be interesting, for sure.



Bye Bye---General Lee