Airbus Wins Delta Order for 40 Aircraft: Airline Has Mainly Bought From Boeing in the Past

September 4, 2013, 2:00 p.m. ET

By JON OSTROWER

The Wall Street Journal

Delta Air Lines Inc. placed an order for 40 Airbus jetliners in a deal valued at up to $5.6 billion at list prices, a victory for the European plane maker because the airline has mainly bought planes from rival Boeing Co. in the past.

Delta already operates more than a hundred single- and twin-aisle Airbus aircraft, all of which it acquired through its 2008 merger with Northwest Airlines. But the Delta brand had not purchased jets from Airbus since 1992, and the European plane maker's jets account for only about a fifth of the combined carrier's current fleet of 727 jets, according to a Delta regulatory filing.

U.S. airlines have ordered more than 2,000 new jets from Airbus, Boeing, Bombardier Inc. and Embraer SA over the past several years as their less-efficient fleets have neared retirement and jet-fuel prices have remained high.

Delta's aircraft-buying patterns have largely run counter to the other major U.S. carriers. Delta opts to refurbish older aircraft or buy current-generation jets at discount prices rather than shoulder the heavy financing and capital costs that come with next-generation jetliners.

Delta said it expects the 30 A321s it ordered to be delivered in 2016 and 2017, near the end of Airbus's phaseout of the current A320 family of jets. Typically, an airplane at the end of its production run commands a much lower price. The A321 lists for $107.3 million, before discounts. Airbus is a unit of European Aeronautic Defence & Space Co. 

Delta Chief Executive Richard Anderson called the agreement with Airbus "another opportunistic fleet transaction for Delta in which we acquire economically efficient, proven-technology aircraft."

Delta's last big order for new large jets was in 2011, when it agreed to buy 100 single-aisle 737-900ER jets from Boeing, the first of which will join Delta's fleet in the coming months. Airbus's 190-seat A321 competes directly with the 737-900ER.

Delta's latest order also includes 10 Airbus A330-300s, which compete with the 787 Dreamliner, Boeing's new flagship plane. Northwest was initially the U.S. launch customer for the 787, ordering 18 of the jets in 2005. But Delta, after the merger, deferred the order to 2020 after years of delays and concerns over the reliability of the Dreamliner.

Northwest Airlines, whose management today heads Delta, had a long history with Airbus, having placed a landmark order in 1986 that first allowed the European plane maker to break into the U.S. market with its single-aisle A320 jets. Wednesday's order will expand Delta's existing fleet of A330s, which were first purchased in 2001 and delivered to Northwest Airlines from 2003 to 2007.

Delta says it will be the first to operate an updated version of the 293-passenger A330 starting in the spring of 2015. The plane, which lists for $239.4 million, can carry more passengers, cargo and fuel than earlier versions for use on Delta's Atlantic and Pacific routes.

Airbus has lagged behind Boeing in selling out remaining current-generation, single-aisle jets it plans to build before transitioning fully to new models with new fuel-efficient engines first due to airlines in 2015 and 2017, respectively.

Airbus in a statement said that "many" of the 30 A321s will be built at its new U.S. assembly facility in Mobile, Ala., which the plane maker built in part to win orders from North American customers. The assembly line will deliver its first A320 jet to JetBlue Airways Corp. in 2016.

Source:  http://online.wsj.com