Boeing and DAL sign new parts contract

[FDJ2]

Boeing and Delta Air Lines Sign Contract for Innovative Maintenance Solution 12:00 p.m. 06/25/2004 Provided by

SEATTLE, Jun 25, 2004 /PRNewswire-FirstCall via COMTEX/ -- Boeing (BA) and Delta Air Lines (DAL) have entered into an agreement that will reduce Delta's total cost of ownership by having Boeing manage much of Delta's airframe spare parts.Under the arrangement, known as Integrated Materials Management (IMM), Boeing will be responsible for the purchasing, inventory management and logistics for a number of Delta's expendable aircraft parts. Initially the program will be focused primarily on proprietary Boeing parts with the potential to expand the scope of the program in the future."Boeing is very pleased that we are continuing our long-term relationship with Delta," said Mark Owen, Boeing vice president of Material Management and Spares. "Our intent is that, through this program, Delta will not only avoid the cost of holding inventory, but eliminate the problem of spare-parts obsolescence and improve its overall materials management productivity."Boeing and other suppliers will own the aircraft parts, which will be stored at a location near the airline's operations until needed. An airline will only pay for parts as it uses them, significantly reducing the airline's inventory holding costs and improving its return on assets."The Integrated Materials Management arrangement with Boeing will assist with our Lean Maintenance Strategy," said Jim Maucere, Delta's vice president of Maintenance. "We expect the program to improve efficiencies in our logistics and repair processes while driving down costs associated with carrying inventory."Integrated Materials Management builds on existing materials management programs that Boeing has with several other airlines. This program is the next advance in expanding Boeing's supply chain services to provide value to both airline customers and supplier partners. Japan Transocean Air (JTA) recently signed a similar agreement with Boeing.

 

[General Lee]

That is one part of our plan for help from creditors. We need help from many areas--not only pilot pay.

 

[Palerider957]

General:


When is the "strategic review" due to be completed, and is GG likely to release it to the masses??

I can't believe anything takes six months to evaluate. I really hope this isn't just another Mullen esqe welfare consultant program for college buddies.

 

[General Lee]

Palerider,

Good question. He said late AUG now (even though he has been on the Board since 1989(?)). But, he wants negotiations to start in July--before the reivew is finished. Would you give back pay before a plan or review is done? Questionable, but atleast we are starting the process. I doubt much will change in the review---they are looking to cut costs in every unit--not just flight ops. With the passengers "back" now--I don't know if they will park any mainline or DCI planes--but there was talk of maybe getting rid of one type of plane as the leases expire. (the 737-200 leases start to expire from next year 2005 thru 2008) A rolling hub at ATL might give us an additional 30-40 flights a day there--and that may increase the efficiency of crews---keeping them in the same planes thru the hubs. A lot of this is speculation, and it will be interesting to see what Dalpa and Delta do.

Bye Bye--General Lee

 

[MedFlyer]

Palerider,

Good question. He said late AUG now (even though he has been on the Board since 1989(?)). But, he wants negotiations to start in July--before the reivew is finished. Would you give back pay before a plan or review is done? Questionable, but atleast we are starting the process. I doubt much will change in the review---they are looking to cut costs in every unit--not just flight ops. With the passengers "back" now--I don't know if they will park any mainline or DCI planes--but there was talk of maybe getting rid of one type of plane as the leases expire. (the 737-200 leases start to expire from next year 2005 thru 2008) A rolling hub at ATL might give us an additional 30-40 flights a day there--and that may increase the efficiency of crews---keeping them in the same planes thru the hubs. A lot of this is s



Bye Bye--General Lee

I've heard the reason that the strategic review keeps getting delayed is that DL doesn't have the internal manpower. Seems that many of the lower end bean counters have been bailing out as fast as possible.

I think the reason he wants to start the negotiations in July is because he knows that the next few offers from DALPA will still be too low. May as well let DALPA get those low offers out of their system now, so that serious bargaining can occur in the fall.

 

[General Lee]

Medflyer,


You may be correct, but Dalpa is the group that really re-started the talks. If they didn't have a good offer, why wouldn't they just wait for the Fall? I think this offer will be closer to what the company wants--although they probably won't get everything. There may be some interesting developments---with 100 seater type pay rates maybe created, etc.... I think it is good that they are starting earlier. Everybody wants to RUSH everything---and it would be nice to know what Grinstein wants to maybe do---like a plan---or atleast the "jist" of what he wants to do. I don't know if the lower level bean counters are bailing---but he just got rid of two more VP's yesterday--one being the "VP of PROFIT initiatives." He obviously didn't do his job well...... But, it obviously was the pilots' fault....

Bye Bye--General Lee

 

[FDJ2]

Associated Press
Delta Hires Boeing to Manage Inventory
Friday June 25, 5:10 pm ET Delta Hires Boeing to Manage Spare-Parts Inventory

NEW YORK (AP) -- Delta Air Lines Inc. has hired Boeing Co. to manage its inventory of spare airplane parts as the airline seeks to cut costs.

The companies said Friday aircraft giant Boeing will operate a spare-parts shop at Delta's technical operations facility, managing the airline's inventory of nuts, bolts and other expendable parts for the airline's fleet of 550 airplanes.

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http://us.ard.yahoo.com/SIG=1256omr...perty=finance&area=news&url=/marketing/onlineDelta and Boeing wouldn't give financial details of the deal, but Joe Brummitt, head of Boeing's Integrated Materials Management program, said other airlines in the program have cut total maintenance costs by as much as 20 percent.

Last year, Delta spent $630 million on aircraft maintenance materials and outside repairs. Delta officials declined to say how much the program might save them.

Mechanics at Delta might not know the difference once Boeing takes over the parts shops. Brummitt said he doesn't plan to change the way mechanics order supplies. The only change will be that Delta doesn't actually buy the parts until a mechanic takes them from the shop. Instead, Boeing owns the spare inventory, allowing Delta to take a liability off its balance sheet.

At the end of 2003, the airline's total parts inventory amounted to $202 million, net of a $183 million allowance for obsolete parts. Delta said Boeing will manage less than 20 percent of the total consumable inventory.

Boeing's Brummitt said the airplane maker started the program as a way to help customers cut costs.

"We want to provide them with a cost-reduction option," he said, adding Boeing is "aware of the current environment" for airlines, in which the carriers with the lowest costs are generating the highest profits.

Boeing has also signed deals this year to manage expendable parts for low-cost carrier AirTran Holdings Inc., as well as Japan Airlines' Japan TransOcean Air unit under the IMM program, Brummitt said. Before Boeing began the IMM program, the company had deals to manage inventory for Japan Air and KLM Royal Dutch Airlines.

Tad Hutcheson, a spokesman for AirTran, said the Atlanta airline expects the program "to save us a considerable amount of money over the life of the contract," though he also declined to estimate how much. AirTran's inventory management contract with Boeing only recently kicked in, he said.

Boeing's Brummitt said he wants to expand his relationship with airlines to manage more of their parts. He said he is also talking with some airlines about managing the maintenance of airplane parts that aren't expendable, but can be repaired and put back on the airplanes.

He also said he expects to sign up more airlines or other maintenance providers to the program this year.

"Boeing will definitely make some money doing this," he said, though he declined to say when the program will turn a profit, or how large that profit might be.

Shares of Chicago-based Boeing finished at $51.30 Friday, up 95 cents, or 1.9 percent, on the New York Stock Exchange. The day's strongest level of $51.35 was a 52-week high, surpassing the prior high of $50.78 set Thursday.

There was also a modest gain for shares of Atlanta-based Delta, which finished at $6.61, up 11 cents, or 1.7 percent, on the NYSE.

 

[~~~^~~~]

I don't know if they will park any mainline or DCI planes--but there was talk of maybe getting rid of one type of plane as the leases expire. (the 737-200 leases start to expire from next year 2005 thru 2008)

General : Any idea what type? Word from a couple of the ASA mechanics is that the ATR 72 PEC ( the fancier electric propeller control ) models are on their way out when the leases expire. Whate are you hearing?