Delta looks at Air­bus A320 Jet for Boe­ing-dom­i­nated fleet

The Pak Banker - - Company& -

AT­LANTA: Delta Air Lines Inc. will weigh adding a more fuel-ef­fi­cient ver­sion of Air­bus SAS's nar­row-body A320 to a fleet his­tor­i­cally dom­i­nated by Boe­ing Co. jets.

"Like ev­ery­one else, we'll look closer at the A320 to see if it might merit deeper con­sid­er­a­tion for our long-term fleet plans," Chief Ex­ec­u­tive Of­fi­cer Richard An­der­son said late yes­ter­day in a weekly recorded mes­sage to em­ploy­ees.

Air­bus said ear­lier this week it will of­fer new en­gines for its sin­gle-aisle A320 air­craft se­ries that can in­crease fuel ef­fi­ciency by 15 per­cent. The planes will be avail­able in 2016 and will com­pete with Boe­ing's nar­row-body 737, the world's most widely flown air­liner.

"We wish Boe­ing would do the same, but it doesn't look like the 737 will have much in­no­va­tion in the com­ing years," An­der­son said. At­lanta-based Delta is the sec­ond-biggest U.S. air­line.

Boe­ing hasn't com­mit­ted to of­fer­ing new en­gines on the 737 or re­plac­ing the plane with an all-new jet, a spokesman for the Chicago-based com­pany said this week. The busi­ness case for new en­gines is "not as com­pelling as we'd like to see," Boe­ing Com­mer­cial Air­planes CEO Jim Al­baugh said in Oc­to­ber.

A Boe­ing spokesman, Jim Proulx, de­clined to com­ment to­day re­gard­ing An­der­son's re­marks.

"We're in reg­u­lar con­tact with our cus­tomers about the value that the next-gen­er­a­tion 737 brings to the mar­ket," Proulx said. "That said, we don't dis­cuss the con­tents of con­ver­sa­tions we may have with them."

Delta and Boe­ing have long had a close re­la­tion­ship, with jets built by the plane­maker and other com­pa­nies it acquired ac­count­ing for about two-thirds of Delta's fleet at the end of Septem­ber. Boe­ing led a cred­i­tors com­mit­tee dur­ing Delta's bank­ruptcy that suc­cess­fully fended off a hos­tile takeover bid from US Air­ways Group Inc. in Jan­uary 2007.

Delta has re­peat­edly said it doesn't plan to pur­chase many new planes in the im­me­di­ate fu­ture, and is in­stead spend­ing $1 bil­lion on its ex­ist­ing fleet to add flat-bed seats and first-class cabins.

"While we're pretty happy with our fleet to­day, we're al­ways watch­ing changes in the ca­pa­bil­ity of air­craft," An­der­son said.

Delta's nar­row-body jets in­clude more than 100 MD88s that are about 20 years old on av­er­age, about 50 DC-9s that are 34 years old, and about 70 A320s that are 16 years old, ac­cord­ing to a reg­u­la­tory fil­ing for the third quar­ter. The fleet to­taled 821 planes, the fil­ing showed. The car­rier gained Air­bus jets when it bought North­west Air­lines Corp. in 2008.

The new A320 will give air­lines a choice be­tween Pratt & Whit­ney's PurePower geared tur­bo­fan en­gine, the Leap-X from CFM In­ter­na­tional, a joint ven­ture by Gen­eral Elec­tric Co. and Safran SA, or the ex­ist­ing en­gines.

Delta climbed 12 cents to $13.63 at 4:19 p.m. in New York Stock Ex­change com­pos­ite trad­ing. Boe­ing fell 5 cents to $66.54.

More­over, Delta Air Lines Inc. (DAL) said its traf­fic rose again in Novem­ber, post­ing one of the high­est gains since the re­turn of con­sis­tent growth in May as the car­rier con­tin­ued to in­crease ca­pac­ity.

Air­lines of all stripes have been re­port­ing im­prov­ing traf­fic as de­mand for air travel among both con­sumers and busi­ness cus­tomers bounces back from the re­ces­sion's weak lev­els. Be­fore the re­ces­sion, car­ri­ers strug­gled with record high en­ergy prices.

Delta's traf­fic rose 7.5%, driven by an 11% in­crease in traf­fic abroad while do­mes­tic traf­fic was up 5.3%.

That is the sec­ond-high­est in­crease in traf­fic since it has turned pos­i­tive, out­shone only by Oc­to­ber's 8.6% climb.

Delta's ca­pac­ity was up 7.5%. Load fac­tor-a mea­sure of plane oc­cu­pancy-was down a tenth of a per­cent­age point to 79.5%.

This fall, Delta lost its ti­tle as the world's biggest car­rier af­ter the merger of United Air­lines and Con­ti­nen­tal Air­lines to form United Con­ti­nen­tal Hold­ings Inc. (UAL). Delta plans to spend more than $2 bil­lion through 2013 to lure trav­el­ers with new flat-bed seats, video on de­mand and up­graded fa­cil­i­ties in hotly con­tested mar­kets such as New York.

Its most re­cent quar­terly re­sults beat an­a­lysts' ex­pec­ta­tions and it pre­dicted its first fourth-quar­ter profit in a decade. -Bloomberg

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