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Monday, July 18, 2022

Source: CNBC

Delta buys 100 Boeing Max planes, its first major order with the manufacturer in more than a decade

July 18, 2022
By Leslie Josephs
A Delta Air Lines Boeing 737 Max plane

A Delta Air Lines Boeing 737 Max plane | Courtesy: Delta Air Lines

Delta Air Lines is buying 100 Boeing 737 Max 10 planes, its first major order for new aircraft from the U.S. manufacturer in more than a decade.

The deal has options for 30 more of the planes. Deliveries are slated to begin in 2025.

The new order is good news for Boeing as Airbus recently won high-profile sales, including to several of China’s state-owned airlines. Boeing lamented trade tensions when that order was announced.

The order is worth $13.5 billion at list prices but discounts are common, especially for large sales. Delta didn’t disclose how much it paid but said the sale wouldn’t change its latest capital expenditure forecast.

Delta said Monday that the order will modernize its narrow-body fleet as the carrier seeks to capitalize on a rebound in travel following the record slump caused by the Covid pandemic. It said the Max planes will be 20%-30% more fuel-efficient than the jetliners they will replace.

Atlanta-based Delta is the only one of the top four U.S. carriers that hasn’t ordered new Boeing jets in recent years, favoring Airbus as it beefed up both its narrow-body and longer-range wide-body fleet. Delta retired older Boeing 777s during the pandemic and has been taking more deliveries of Airbus A350 twin-aisle planes.

The 737 Max was grounded for at least 18 months after the second of two fatal crashes in 2018 and 2019 together killed 346 people. The U.S. lifted the grounding in November 2020. Delta’s competitors over that period faced capacity constraints because deliveries of new Maxes were paused.

The Max 10 model is the largest of the narrow-body Max family and doesn’t yet have government approval. Boeing hopes to win approval for the planes before the end of the year, ahead of regulation passed in the wake of the two crashes that will require new planes to be outfitted with a cockpit alert system going into effect, though lawmakers could provide Boeing with a waiver.

“We have to make our case and it has to be persuasive, and we believe it is,” Boeing CEO Dave Calhoun told CNBC’s “Squawk Box” on Monday.

Delta said it expects the FAA to sign off on the planes next year.

Delta’s CEO, Ed Bastian, had previously hinted at an order for Max planes. When asked at a recent investor conference about a potential order of the narrow-body planes, Bastian said, “We’ve been trying to get a deal done with Boeing on that … hopefully we’ll be able to figure that out.”

Delta will configure the plane with 182 seats: 129 in standard economy, 33 in Comfort+ with extra legroom and 20 in first class.

Most of Delta’s new orders in recent years came from Europe’s Airbus.

In 2017, Delta was in the middle of a trade dispute between Boeing and Canada’s Bombardier, the then-producer of C-Series narrow-body planes, which Delta ordered.

alleged Bombardier was selling the planes below cost, a case it eventually lost. Airbus later took over the program, renaming the planes the A220.

Boeing shares gave up earlier gains as the broader market fell, ending Monday little changed, while Delta shares rose 3.5%.

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