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Delta has cancelled $4 billion order from Boeing



Delta has cancelled $4 billion order from Boeing

Delta has cancelled $4 billion order from Boeing

Delta Air Lines Inc. has cancelled an order for 18 Boeing Co. widebody Dreamliner jets, valued at $4 billion at list prices. The cancellation came 8 years after the commitment was inherited with Delta’s 2008 merger with Northwest Airlines. On Tuesday, Delta reached an agreement with Boeing on the cancellation, without disclosing the terms agreed upon. The airline, however, is sticking with orders already in progress for 120 narrowbody Boeing 737-900ERs. The first of its 18 787s, which were initially ordered in 2005, were due to arrive in 2008, but production delays at Boeing pushed back the 787’s debut by several years.

In a statement, Delta’s senior vice president of supply chain management and fleet Greg May said, “Delta is one of the world’s largest operators of Boeing aircraft and our valued partnership with Boeing will remain strong as we safely and comfortably serve our customers across the world every day. This business decision is consistent with Delta’s fleet strategy to prudently address our widebody aircraft needs,”

Boeing’s stock fell less than 1 percent to $156.14 at 12:47 p.m. in New York. The shares had climbed 8.9 percent this year through Tuesday. Delta declined 1.7 percent to $49.53.

According to Helane Becker, a Cowen & Co. analyst, Delta and Boeing agreed to change the Dreamliner contract when the 737-900s were ordered, with the dollar value of the smaller aircraft credited against the 787s.

But there seems to be no surprise reaction to Delta’s decision. While some Northwest pilots proclaimed the 787 as a “star,” known for its fuel efficiency and a body made of composite materials, some of Delta’s 777 aircraft had nearly the same capabilities. , according Bob Mann, head of aviation consultant R.W. Mann & Co. in Port Washington, New York. Delta is also known for flying larger planes on average than its peers, and the larger 777 is more consistent with that strategy than the 787, Mann said.

“I wasn’t surprised, but I was surprised they took 10 years to do it,” he added.

Delta has focused its widebody jet fleet around Airbus Group SE planes, but remains as one of Boeing’s biggest customers, ordering 120 of its 737-900ER single-aisle jets. American Airlines Group Inc. and United Continental Holdings Inc. both operate the 787.

“Everyone has been waiting for this,” Addison Schonland, an aerospace analyst at the AirInsight consulting firm, said to the Puget Sound Business Journal. “Why it took so long, I don’t know. Delta seems to have moved to Airbus wide body planes.”


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