After a gap of almost 21 years,
Delta Airline Inc.
) has favoured European aircraft manufacturer Airbus over its
The Boeing Co.
). The premier U.S. passenger carrier has announced plans to
purchase 40 new jets from Airbus in a deal worth $5.6
Delta has ordered 10 A330-300 wide body jets and 30 narrow
body A321 aircraft to be delivered between 2015 and 2017.
Although the A330 line of planes has already been replaced by the
advanced A350 series by Airbus, Delta's choice of the former and
cheaper models indicate its intent to save capital costs.
Atlanta-based Delta will be the first airline to operate the
enhanced version of the A330, which contains
General Electric Co.
) CF6-80E1 engines. The 293 capacity A330 will include latest
in-flight entertainment features along with Wi-Fi connections and
a modern interior to enhance customer experience.
Four A330 will be delivered in 2015, with another four
scheduled for the coming years and the remaining two for 2017.
These white bodied jets, which include 34 lie-flat seats, will be
used for Delta's international routes.
Narrow-bodied A321s, which features similar in-flight
entertainment, will have a capacity of 190. The first three A321s
will be delivered in the first quarter of 2016. Another 12
aircraft will be delivered in 2016 with the remaining slated for
2017. These will serve the company's domestic routes.
Notably, Delta has the most diversified fleet among all the
other U.S. carriers, which include more than 500 Boeing and close
to 160 Airbus aircraft. In Jul 2012, Delta entered into an
Southwest Airline Co.
), whereby the latter will lease 88 used 717s to Delta. Though
carriers generally go to a single aircraft manufacturer to
enhance operational efficiencies, a mixed portfolio generally
allows greater negotiating power.
Carriers usually have to incur high capital costs for buying
aircraft. By opting for older versions we believe Delta has to
forego some of the operating cost efficiencies of newer versions.
However, the airline will get an opportunity to upgrade its fleet
at a much lower price, which in turn will enhance the returns for
Delta currently carries a Zacks Rank #3 (Hold).
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