Delta has just placed a massive order for Airbus A321neo aircraft. Specifically, Delta has a firm order for 100 Airbus A321neo aircraft, and options for a further 100 of the plane. Deliveries for the plane will begin in 2020, and are expected through 2023. Delta plans to configure these A321neos with 197 seats, including 20 first class seats, 30 Delta Comfort+ seats, and 147 economy seats.
At list prices this order is valued at over 12 billion USD, so this is a big win for Airbus. For those of you not familiar, the A321 is the biggest plane in the Airbus narrowbody family, and the “neo” part means that it features the new engine option, which improves the fuel efficiency and range of the aircraft. In some cases the A321neo can even be used to operate transatlantic flights.
Here’s what Ed Bastian, Delta’s CEO, has to say about the deal:
“This is the right transaction at the right time for our customers, our employees and our shareholders. Delta, Airbus and Pratt & Whitney share the same commitment to safety, efficiency, innovation and continuously improving the customer experience. This order for the state-of-the-art A321neo with Pratt’s Pure Power next-generation jet engines reflects our long-term commitment to these values for Delta people and all our constituents.”
Meanwhile here’s what Airbus’ COO has to say:
“The A321neo will equip Delta employees with a customer-preferred, versatile narrowbody aircraft befitting their position as a global airline leader — and we are excited to continue to partner with them as they deliver industry-leading operational performance, customer satisfaction and financial results. This purchase furthers our commitment to U.S. aviation — a commitment that has never been stronger. Today, there is more U.S. content in Airbus aircraft than from any other country, with more than 40 percent of our aircraft-related procurement coming from the United States. In addition, our workforce at the U.S. Manufacturing Facility in Mobile, Alabama is proud that they will be delivering many of these A321neos to Delta in the coming years.”
In terms of Delta’s current narrowbody aircraft orders, they have 92 Airbus A321s (non-neo) to be delivered through 2021, 42 Boeing 737-900ERs to be delivered through 2019, and 75 CSeries 100 aircraft to be delivered starting next Spring (at least in theory, though it looks like some of those aircraft may be going to Aeromexico).
Some of you may remember the recent controversy surrounding Delta’s Bombardier CSeries order. Specifically, Boeing filed a complaint with the US Commerce Department, asserting that Bombardier was getting illegal subsidies from the Canadian government and dumping its product (specifically, the CSeries aircraft) into the US market.
The government ended up siding with Boeing, meaning that they wanted to levy huge taxes on the aircraft, which Delta obviously wasn’t happy about. It looks like Airbus will be taking over the CSeries program and building some of the planes in the US as a way of getting around that, though the deal is only expected to close later this year.
While I wouldn’t go so far as to say that an order with Airbus over Boeing is retaliation, I’m sure Delta is happy that they can tell Boeing to “shove it” in this case. In reality, Boeing doesn’t really have a real competitor to the A321. They have the 737-900, but that’s still quite a bit smaller.
The irony in all of this, however, is that in the battle between the US and Gulf carriers, Delta constantly stresses the importance of American jobs, arguing how the Gulf carriers lead to American job losses, etc.
Meanwhile here’s Delta spending billions of dollars with a European aircraft manufacturer over Boeing. I’d love to know how many jobs that’s “sending overseas,” per Delta’s wonky math. Meanwhile the Gulf carriers are huge customers of Boeing’s.
What do you make of Delta’s big Airbus A321neo order?
The Delta deal could put Boeing commercial aircraft out of business.
@J - great write up!
re. my comment - The way discussion (not the article) was going, I was not talking about Delta, nor was I saying who's got better deal. I was purely and simply saying, if you, commentees or public, cry Boeing is losing out, well they have EK.
And if that's worse for B? Well, their business heads should have known better!
I,ve read the reports, and it seems Delta are getting good value for the Planes, which are a good design, well built, in USA, and Europe, Please don,t forget, for the USA, Planes Made in USA, would be better, for the Country, but Delta have shared their order with a few countries, The main factor also , every passenger, in not US , many UK, and others fly Delta, so Delta get more dollars for...
I,ve read the reports, and it seems Delta are getting good value for the Planes, which are a good design, well built, in USA, and Europe, Please don,t forget, for the USA, Planes Made in USA, would be better, for the Country, but Delta have shared their order with a few countries, The main factor also , every passenger, in not US , many UK, and others fly Delta, so Delta get more dollars for USA, from their flights , to other countries, , anyway happy Holidays from UK to USA and others,
@AlexD This is no Emirates. This is Delta we're talking about.
From a purely financial perspective, this deal means a lot:
1. It further cements the idea that Delta has picked the A321 and A321neo over the 737-900ER and 737MAX9/10 as their replacement aircraft for the 757. Delta has over 100 757s in service: this works as a replacement for those aircraft AND some others.
2. This order doesn't just affect the...
@AlexD This is no Emirates. This is Delta we're talking about.
From a purely financial perspective, this deal means a lot:
1. It further cements the idea that Delta has picked the A321 and A321neo over the 737-900ER and 737MAX9/10 as their replacement aircraft for the 757. Delta has over 100 757s in service: this works as a replacement for those aircraft AND some others.
2. This order doesn't just affect the 757, it also affects the entire narrow-body fleet. Having picked the A320neo family over the 737MAX family means that they've invested not only in one product but potentially more. Excluding the 717 on the low end and the 757 on the high end of capacity, Delta has 499 narrow-body aircraft currently in the fleet. While this order doesn't necessarily mean that they'll pick Airbus over Boeing for ALL of their orders, it means that for now, this is the next-generation plane that Delta prefers (for price, performance, or other reasons).
If we look at the current Delta fleet, the narrow-body aircraft that stand out requiring replacement (or requiring it in the future) are the A319/A320, B717, B737/B738, B757, and MD88/90. Knowing that the 757s are being replaced by 737-900ERs and A321s, that the 717 is (supposedly) being replaced with the CSeries, and that the MD88/90 is being replaced with the A321 and 737-900ER leaves the A319/A320 and B737/B738. Knowing that the A319s have an average fleet age of 16 years, the A320 22 years, and the oldest 737s 18 years, it's clear that these planes will need replacement in the next decade. Assuming we replace them with Airbusses, it'd look something like this:
A319-100 (57) and B737-700 (10) for a total of 67 aircraft: potentially replaced with A319neo for a list price of 6.67 billion USD.
A320-200 (64) and B737-800 (77) for a total of 141 aircraft: potentially replaced with A320neo for a list price of 15.28 billion USD.
This doesn't even include the fact that other potential orders to replace ageing Delta aircraft will lean further towards Airbus now that they are on even better terms (and on worse terms with Boeing with the CSeries debacle) -- within the next decade, Delta will need to replace the 767, and the incoming A330neo order will not replace each plane. A top-up order is required, and the manufacturer of that order is up for grabs.
And the top-up order concept also applies in this situation -- knowing that Delta has 42 remaining 737-900ERs to be delivered, 92 A321s to be delivered, and now 100 A321neos, that's a count of 234 aircraft. With 287 aircraft to replace (109 MD-88s, 62 MD-90s, 100 757-200s, and 16 757-300s), there's a shortage of about 50 planes (without even counting that the A321 and 737-900 are smaller than the 757), meaning that we will potentially need to see another top-up order in the future. Now that over 200 Airbus A321s and A321neos will be coming on-property, it may be certain who they pick for that.
This is not Emirates -- this is larger than Emirates. With a potential list price of 20 BILLION dollars, the future of Delta's narrowbody fleet orders is enormous. And while the A321neo order doesn't make certain Airbus is the only manufacturer (Delta currently operates both Airbus and Boeing and has ongoing deliveries for both the 737-900ER and A321), it makes it clear that Delta is at least willing to experiment with the NEOs before the MAXs.
@steve- you are nuts- the tax incentives for the Apple Cork facility are massive- literally billions and billions of dollars. There is no way that any US state would be at all competitive.
The US needs corporate tax reform to create a different system that taxes based on sales, rather than recognised profits. Unfortunately the current swamp creatures in power are too busy lining their own pockets to do what is best for America...
Why are so many crying over Boeing losing to Airbus? B just got huge order from Emirates!
@Neil S. --
They didn't announce it now, but I would be shocked if they don't end up using some of these with a flat-bed premium product to replace the 75S.
"How many hundreds of billions does Apple have in off-shore accounts that isn’t helping anyone in the US? It’s not only an Airbus issue."
Agree and I have no love for Apple either. I've seen their spread in Ireland, douchebags could have built that in at least a couple dozen US states and not taken that much of a hit.
@steve - Yes, the profits are repatriated. The wages paid to American workers stay in this country. I also get that doesn't include engineering jobs. But it's fairly significant.
Is it like buying planes from Boeing, financially? No, not completely. But the bigger issue is Boeing didn't have what they wanted.
How many hundreds of billions does Apple have in off-shore accounts that isn't helping anyone in the US? It's not only an Airbus issue.
"Your Fellow Engineer (Who is looking for a job). says:
December 14, 2017 at 11:58 am
All i’m gonna say is a plane built in the US is not a plane designed in the US. There are significantly more jobs provided when a plane is designed and built in the US."
Yeah plus the profits are repatriated to Europe knuckleheads!
All that said, there is no question. From a comfort/ergo standpoint A32 series...
"Your Fellow Engineer (Who is looking for a job). says:
December 14, 2017 at 11:58 am
All i’m gonna say is a plane built in the US is not a plane designed in the US. There are significantly more jobs provided when a plane is designed and built in the US."
Yeah plus the profits are repatriated to Europe knuckleheads!
All that said, there is no question. From a comfort/ergo standpoint A32 series more cattle-friendly. Apples to apples will choose over B73-whatever everytime. It's ridivuculous that Boeing is selling a narrow body fuselage that is fundamentally the same and dimensionally exactly the same in some ways from 50 years ago.
For what Delta wants these planes for, the 321 was the better choice. I do think Airbus needs to rewing it, but that may come about when Airbus responds to whatever Boeing offers as it's MOM. Regardless, for the missions Delta will be using it for, it appears superior to the MAX. Toss in acquisition and maintenance costs and this was Airbus' deal to lose. It's also very likely that Delta wanted this order to...
For what Delta wants these planes for, the 321 was the better choice. I do think Airbus needs to rewing it, but that may come about when Airbus responds to whatever Boeing offers as it's MOM. Regardless, for the missions Delta will be using it for, it appears superior to the MAX. Toss in acquisition and maintenance costs and this was Airbus' deal to lose. It's also very likely that Delta wanted this order to get in on the P&W maintenance biz, as they're in many ways the Lufthansa Teknik of the US airline industry. This gets them into the P&W geared turbofan in a big way.
As a Boeing shareholder, I'm sorry that my company lost this contract but I'm not surprised. There are many factors that go into airplane acquisition besides raw performance specs and price, and however the issue was cut up, this was Airbus' deal all the way. Hopefully, it will spur Boeing to produce the MOM a little bit quicker, or else they'll continue losing deals like this due to the lack of any real competitor in the large narrowbody space.
Now, the elephant in the room: was this retaliation for Boeing's complaint over the C-Series order? Yes, I actually do think it was, at least partially. As I said earlier, the 321 is the better place for what Delta will use it for. Toss in the engine maintenance issue and buying form Airbus doubtless became even more attractive. However, the bad blood over the Boeing complaint had to he there, must have left a sour taste in Delta's mouth, and it certainly must have made Delta management very happy to be able to tell Boring to go pound sand.
All i'm gonna say is a plane built in the US is not a plane designed in the US. There are significantly more jobs provided when a plane is designed and built in the US.
As mentioned previously that Delta may be a hypocrite, Boeing even more. Complaining about the C-series? Really? How about all the threats about getting tax breaks in the state of Washington. How about the tanker competition? Talk about big whiner. Glad Boeing lost. They need a reality check.
The closest true 757 replacement (on paper and certainly in terms of when it can enter service) is the 321neoLR. Who's to say that some of those options don't eventually get converted to LRs?
Boeing's MoM/797 concept is many, many years from flying.
LOL, poor Boeing
Well done Airbus, nice order! I too prefer flying Airbus A320 family vs. 737 family.
However, this order with Airbus is the 'kiss of death' for the Delta CSeries order...no way US Govt will allow that aircraft to operate in US airspace, even with the 'no cost' Bombardier sale to Airbus. Delta may try to lease the CSeries from Aeromexico or others...that workaround will not pass muster with US trade authorities either.
Might...
Well done Airbus, nice order! I too prefer flying Airbus A320 family vs. 737 family.
However, this order with Airbus is the 'kiss of death' for the Delta CSeries order...no way US Govt will allow that aircraft to operate in US airspace, even with the 'no cost' Bombardier sale to Airbus. Delta may try to lease the CSeries from Aeromexico or others...that workaround will not pass muster with US trade authorities either.
Might be trade war looming, Trump is pretty stubborn...
Hum some Airbus are built in the US
The labor unions have programmed many of you very well.
Like Neil said, Americans actually work at the Mobile AL plant where Airbus will manufacturer most of these A321s.
Vastly prefer Airbus over Boeing. They generally have nicer interiors, are more quiet and comfortable to fly, and seemingly hold up better to wear and tear (interior wise).
Boeing needs to get with the times.
Norman, Airbus has a A321 factory in Mobile, AL. And Americans actually work there!
If I were Alaska Airlines, I’d put up billboards all over Seattle saying, “Alaska Airlines, Seattle’s Boeing airline”
Most of these planes will be built in Alabama. So that's American jobs.
Are they replacing the 75 and 76? None will have beds, like Mint. At some point, something has to replace the 75S, yes?
The folks at Delta are hypocrites.
The Boeing 757 was more a competitor to the A321, but of course Boeing axed it, leaving a gap in its range, along with its gaps at the large and small end of the market as well the middle.
Still, with all those juicy government and military contracts, why bother?
The fair comparison would be the 737-9MAX, not that it makes any difference :p
It’s quite fun to look at these self-conflicting action/ideaologies. What happened to supporting US jobs, delta? Ha!
No surprise, Airbus is way more comfortable flying than Boeing. Boeings are too noisy in the cabin