Bye Bye B787!
Boeing loses $6B Delta order; gives a big boost to Airbus
Seattle Times aerospace reporter
An aviation analyst said the backlog of orders for Boeing’s
787 played a role in Delta’s selecting Airbus for a $6 billion deal, giving the
foreign rival a big boost.
In a showdown in Atlanta, Airbus’
sales team has beaten Boeing’s to win a big order from Delta Air Lines for 50
widebody jets worth more than $6 billion at market prices.
Boeing was trying to sell Delta a
mix of 777-300ERs and the 787-9, the larger version of the Dreamliner, to
replace the U.S. carrier’s aging 747s and 767s.
Instead, Delta will take 25 Airbus
A350-900s, plus 25 Airbus A330-900neos.
The list price of the deal is $14.3
billion. However, according to estimated market-pricing data from
aircraft-valuation firm Avitas, the real value after expected discounts is
about $6.2 billion.
News of the Airbus win, first
reported Wednesday by aviation analyst Scott Hamilton of Leeham.net, was
independently confirmed by The Seattle Times.
A Boeing 787-9 widebody jet takes off
from Paine Field in Everett
last year. Delta has selected rival
planes from Airbus instead
of
Boeing in a deal worth more than $6 billion.
+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Delta orders state-of-the-art Airbus jets
November 20, 2014
The Delta livery will soon appear on two new aircraft types as the airline announced Thursday an order for 25 fuel-efficient Airbus A350-900 and 25 Airbus A330-900neo jets to replace some transoceanic Boeing 767-300ERs and the Boeing 747-400s fleet, which are reaching the end of their life cycle.
Delta will take delivery of the A350-900 starting in the second quarter of 2017 through 2020. The A330-900neo is slated to begin operation in 2019 with deliveries continuing through 2022.
“For Delta’s near-and long-term transoceanic fleet needs, the Airbus A330-900neo and A350-900 give us the right balance of capacity and operating performance with a competitive delivery schedule and capital expense that fits within our current plan,” Ed said. “This order keeps us on track with our strategy of making prudent investments in our fleet with a mix that allows us to put the right sized planes in the right markets.”
The decision to purchase 50 Airbus widebody jets came after a several month long, fact-based review of proposals from Boeing and Airbus by a cross-divisional Delta team, and follows a careful consideration of the airline’s overall fleet needs. Delta fleet acquisition strategy is built on evaluating an airplane’s total cost of ownership –the sum total of long-term operating and maintenance costs, purchase price and other factors—and is key to Delta’s continued financial success.
“We always approach fleet decisions with a balance of economic efficiency, customer experience enhancements, network integration and total cost of ownership,” said Nat Pieper V.P.–Fleet Strategy and Transactions. “The A350 and A330neo support our long-haul, transoceanic strategy and join a mix of Boeing and Airbus aircraft that provide exceptional flexibility for Delta’s global network as well as strong cash-on-cash returns for our shareholders.”
The fuel-efficient, Airbus A350-900 will operate primarily on long-range trans-Pacific routes and are an important component of Delta’s restructuring to optimize its Asia-Pacific network. Airbus’ A330neo, which puts an updated, more fuel efficient engine and new aerodynamic wing on the original airframe, will complement Delta’s existing fleet of Airbus A330s and will be deployed on trans-Atlantic markets as well as select U.S. West Coast to Asia routes.
The new aircraft are expected to deliver 20 percent operating cost savings per seat over the Boeing aircraft they will replace.
In the next several months, the airline will evaluate cabin furnishing and layout options in all classes of service with the goal of optimizing revenue generation, customer amenities, on-board services and employee considerations, among a host of other operational aspects.
As part of its continued fleet modernization, Delta continues to take delivery of 100 new Boeing 737-900ER aircraft, 88 Boeing 717-200s and 40 two class CRJ-900s. Next year, the first of 10 new Airbus A330-300 jets will begin operation in the summer with the first of 45 narrowbody Airbus A321s arriving in 2016.
++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Airbus wins Delta wide-body order
Airbus has won the hotly-contested competition for 50 wide-body airplanes, two sources tell Leeham News and Comment.
Artist rendering of Delta Air Lines A350, via Twitter,
original source unknown.
Airbus will sell Delta 25 A350-900s and 25 A330-900s, our sources say. Rolls-Royce is the sole-source engine supplier.
Boeing hoped to sell Delta the 787-9 and also offered five new 777-200LRs as bridge lift until delivery slots for the 789 were available, according to our information.
Losing is a major disappointment for Boeing, not only because of the sheer number of wide-body airplanes involved but also because this is one of the Big Three US carriers; and there was the slim chance Delta might take Boeing up on the 777LR order, which would help fill the struggling production gap for the 777 Classic.
For Airbus, winning Delta is a major coup for many of the same reasons: the sheer size of the deal, Delta’s status and, while the A330neo order won’t help the A330ceo’s production gap, this gives a good boost to the neo program and adds a prestigious name to the customer list.
According to our information, Boeing couldn’t find early delivery slots for the 789–hence the offer of the 777LR–but Airbus was able to move the A350 skyline around enough to provide the airplane early.
The A359 is intended for the Pacific and the A339 for the Atlantic. Delta is building up a major international hub at Seattle, where some of these airplanes will fly from.
Airbus told LNC, “We do not comment on rumor or speculation concerning discussions with our customers.” Boeing declined comment.
Delta did not respond to a request for comment. Delta’s plan was to announce this at Investors’ Day on December 11.
+++++++++++++++++++++++++++++++++++++++++++++++++
A Strategic Approach: What it takes to build a fleet
November 21, 2014
Delta’s announcement Thursday reflects months of strategic review of proposals from Airbus and Boeing, and follows a careful consideration of the airline’s overall fleet needs.
To order a fleet—in this case, including an entirely new aircraft type—means a painstaking review by a large cross-divisional team of subject matter experts from across the company. They’ve spent months poring over proposals to evaluate and weigh everything from operational specifications such as range and fuel burn to crew rest space, seating configuration and training requirements, aircraft and engine maintenance, ground handling and information technology requirements, not to mention outright purchase price and other deal terms.
Here’s what it takes:
1. Opportunism breeds success.
Delta’s fleet acquisition strategy is by definition opportunistic. As seen through aircraft orders between 2011 and 2014 for narrowbody Boeing 737-900ERs and additional small-batch campaigns to acquire Boeing 717-200s, Bombardier CRJ-900s, Airbus A330-300s and Airbus A321s, the philosophy of having manufacturers compete more often for Delta’s business drives significant benefit to the airline.
“Large orders and long-term fleet commitments are built on an expectation of future financial growth and strength in the economy, and carry a good bit of opportunity cost,” said Nat Pieper, V.P.–Fleet Strategy and Transactions. “Being able to shape the future of Delta’s fleet through a strategy of opportunism means we can be more nimble in responding to market changes and seek attractive, cost efficient opportunities to improve our fleet.”
2. Consider the numbers.
An unbiased evaluation of every aspect of a new aircraft is the objective of Delta’s cross-divisional fleet selection team. Their fact-based analyses ensure Delta selects the right aircraft to benefit the airline’s network, its people, its customers and its shareholders.
Delta evaluated nine aircraft as part of its most recent widebody campaign—the Boeing 777-200LR, 777-300ER, 787-8, 787-9 and 787-10 as well as the Airbus A350-900, A350-1000 and the two variants of the Airbus A330neo, a re-engined version of the A330 with greater aerodynamic and economic efficiency. In the end, the A350-900 offered the appropriate balance of cost of ownership, seating capacity, operating performance and range to operate efficiently in Delta’s Asia-Pacific network, while the A330neo will provide Delta compelling economics and network flexibility on trans-Atlantic and select trans-Pacific routes. Both aircraft will enhance Delta’s industry leading customer offerings.
3. Cost of ownership is key.
Delta has long held that evaluating an aircraft’s total cost of ownership—the sum total of long-term operating and maintenance cost, purchase price and other factors—is key to driving continued financial success to the airline. When making a decision on a multi-million dollar asset like an aircraft, the Fleet Strategy team must synthesize the perspectives of all Delta stakeholders into an objective evaluation of the aircraft over its entire 30-year life, far beyond the immediate fuel efficiency gains and maintenance “honeymoon” of a jet fresh off the factory floor.
Thursday’s order balances Delta’s transoceanic aircraft replacement needs without unnecessarily over-burdening the balance sheet.
4. The answer is in the people.
Delta’s order for 25 Airbus A350-900s—an entirely new fleet type—and 25 re-engined Airbus A330-900neos adds complexity to an already diverse fleet built on a mix of new and used aircraft. But the strategy has proven successful because of Delta people driving industry-leading operational performance despite the added challenges. Airport customer service agents, pilots, flight attendants, dispatchers and maintenance technicians across the operation, showing the Delta “can do” spirit, have produced industry leading operational results versus competitors with far fewer fleet types.
“It’s not a strategy that can work if you can’t drive maintenance efficiency or you can’t drive operational reliability into the business,” said Paul Jacobson, Chief Financial Officer, in a recent analyst conference. “But the entire Delta team has shown what we can do when we all work together.”
++++++++++++++++++++++++++++++++++++++++++++++
Date: 11/17/2014 1:47:06 PM
To: PCN Dir
Subject: Could It Be That Delta Enjoys the Contract
Squabbles at American?
Mark,
You want to
advertise what happened to the retirees.
Write this author
and tell him he forgot to tell the rest of the story.
How a company is
enjoying all these profits after terminating our pension.
Editor: The author you reference wrote the article below. I am the guy who put our plight in story form
(“Is Your Retirement Safe?”) and
but am asking others to help carry the water by finding media outlets for
it. My frustration and anger isn’t spent
on the issue but my energy is! We
thought we had connections with the AJC that were interested and would publish it,
but apparently not. I remain open to sharing my article with any
and every news outlet. Here again is the
URL address for “Is Your Retirement Safe?”: https://drive.google.com/file/d/0BzB_SBDmSd9ARUN2eXlOU2plUzQ/view?usp=sharing
Could It Be That Delta Enjoys the Contract Squabbles at American?
| 11/14/14 - 06:45 AM EST
NEW
YORK ( TheStreet) -- The rejection of a flight attendant contract
and a contentious start to pilot contract talks have been disheartening for the
management and workers at American
Airlines (AAL).
In Atlanta, home of Delta
(DAL)
, the reaction, no doubt, is somewhat different. Not only is a
competitor having problems, but Delta's pilot contract and flight attendant
compensation are being held up as models.
Must Read: American Airlines' Surprise Labor Issues Again Complicate a Merger
In a message to members on Wednesday, Keith Wilson, president of the Allied Pilots Association, which represents American pilots, praised Delta for its commitment to reward employees with profit-sharing, something American isn't offering.
Must Read: American Airlines' Surprise Labor Issues Again Complicate a Merger
In a message to members on Wednesday, Keith Wilson, president of the Allied Pilots Association, which represents American pilots, praised Delta for its commitment to reward employees with profit-sharing, something American isn't offering.
Last month, Laura Glading,
president of the Association of Flight Attendants, convinced American
executives to add $13 million annually to their
tentative contract proposal, arguing that American flight attendant wages
should be equivalent to Delta wages. The proposal still failed.
Delta declined to comment
on Thursday. But as recently as Oct. 26, Delta CEO Richard Anderson jabbed
American and United
(UAL) . While the former has no profit-sharing,
the latter has less profit to share.
"What we're always proud about and what sets Delta off as a totally different company than United and American is our profit-sharing," Anderson said in his weekly telephone message to employees.
"What we're always proud about and what sets Delta off as a totally different company than United and American is our profit-sharing," Anderson said in his weekly telephone message to employees.
"For Delta people who
have already received an early payment on their 2014 profit-sharing and, come
February, will get the remainder of what is expected to be a total of more than
$1 billion in profit-sharing paid to our employees, that means 15% on top of
what your W2 would otherwise be," Anderson said. "So essentially,
it's a 15% pay increase. No other airline is even coming close to that number.
"Some airlines don't
have any of this and are proud of the fact that they don't have it," he
said, adding, "Delta folks are by far the best paid in the industry."
On Wednesday, in an
emailed message to members, APA's Wilson quoted Anderson as saying that
"rewarding employees with pay for performance through profit-sharing ...
drives revenue growth and better financial returns," and added,
"American Airlines management evidently believes otherwise."
Must Read: Two Washington D.C. Airports Head in
Different Directions
<STORY_PAGE_BREAK>
At American, "management does not appear to be interested in providing our pilots with a compensation package comparable to industry leader Delta Air Lines," Wilson wrote.
"While initially proposed pay rates are fractionally higher than Delta's current pilot pay rates, there's little adjustment for the absence of profit-sharing, which this year will equal 15% of annual earnings for Delta pilots," he said. "This means that American Airlines pilots' compensation would continue to trail industry leader Delta by a significant margin."
<STORY_PAGE_BREAK>
At American, "management does not appear to be interested in providing our pilots with a compensation package comparable to industry leader Delta Air Lines," Wilson wrote.
"While initially proposed pay rates are fractionally higher than Delta's current pilot pay rates, there's little adjustment for the absence of profit-sharing, which this year will equal 15% of annual earnings for Delta pilots," he said. "This means that American Airlines pilots' compensation would continue to trail industry leader Delta by a significant margin."
He added that Delta pilots
will soon negotiate a new contract that will likely surpass American's proposed
pay rates.
American CEO Doug Parker
has opposed profit-sharing, saying he would prefer to offer higher wages
because profits cannot be assured.
Meanwhile, union
spokespeople dismissed Anderson's assertion that Delta flight attendants are
better off than others. "I think he's doing everything he can to keep
flight attendants at his airline out of a union," said an APFA spokesman.
The International
Association of Machinists is currently seeking to organize Delta flight
attendants. IAM spokesman Joe Tiberi said Delta flight attendants do not have a
contract. "They don't have anything today that the company is required to
continue providing tomorrow," he said.
-- Written by Ted Reed in Charlotte, N.C.
To contact this writer, click here.
Follow @tedreednc
To contact this writer, click here.
Follow @tedreednc
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Date: 11/17/2014 6:46:36 PM
Subject: A Belated Thank You
It has been
18 years since my retirement, however I felt that it was incumbent upon me to
thank all those senior captains and junior crew members and numerous
other personnel that made my 30 year career a memorable and joyous occasion. Thank you, Thank you, Thank you.
Captain
Nicholas Gravino
Delta Air
Lines, ret.
+++++
Mark, I just heard on
MSNBC that PBGC will run out of money in ten years. It is something to look
into.
Nick Gravino nicholasgravino@att.net
Editor: Nick, those reports
are correct and it is widely assumed that if the PBGC will stay solvent the
feds will have to bail them out.
Comforting huh! The reason they
were happy to take on Delta pilots and have given us a draconian formulation is
that our resources helped the PBGC on the ledger sheet. As to who is on top of
this, our DP3 is conducting a law suit as we speak in reference to the PBGC and
there no better resource and advocate for us as retired pilots than our own
DP3.
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