Last week, Delta announced an order for 100 Boeing 737-900ER aircraft which will allow Delta to retire mainline aircraft and lower operating costs while enhancing the traveler’s experience. Delivery of these new aircraft is expected between 2013 and 2018.
The order will enable Delta to add 100 fuel-efficient, state-of-the-art 180-seat aircraft to its fleet, replacing on a capacity-neutral basis older technology aircraft that will be retired from the fleet. The new aircraft will improve the company’s profitability while providing customers with an industry-leading on-board experience. With a range of 3,200 nautical miles, the Boeing 737-900ER can operate on any domestic route offered by Delta.
“A key component of Delta’s strategy is making prudent investments for the future while maintaining our financial and capacity discipline,” said Richard Anderson, Delta’s chief executive officer. “With this next-generation Boeing aircraft, we can give our customers a superior in-flight experience while at the same time improving our shareholder returns.
“I want to commend all the manufacturers who participated in this process. Their innovation in developing fleet solutions for the future resulted in several very competitive proposals,” he said.
Financially Sound Investment
Delta will begin taking deliveries of the aircraft in the second half of 2013, with 12 aircraft in 2013, 19 aircraft per year in 2014 through 2017, and the remaining 12 aircraft in 2018. Each aircraft has committed long-term financing.
The size and timing of the order will allow Delta to maintain its annual capital expenditure run rate between $1.2 billion and $1.4 billion over the next three years and will not impact the company’s $1.2 billion of capital expenditures projected for 2011. Capital discipline is key to the company achieving its $10 billion adjusted net debt target by 2013.
As a result of maintenance efficiencies and a 15 to 20 percent improvement in fuel consumption per seat, the Boeing 737-900ER will have lower unit costs than the older technology Boeing 757 and 767 and Airbus A320 aircraft that it will replace. The aircraft will be equipped with CFM56-7B engines produced by CFM International, a joint venture of General Electric Co. of the U.S. and Snecma of France.
“With significant savings from increased fuel efficiency and lower maintenance costs, these aircraft will be cash flow positive and earnings accretive from the first year of operation,”Andersonsaid.
Enhanced Customer Experience
Delta is more than halfway through a $2 billion, three-year investment to enhance the customer experience as a means of generating a unit revenue premium to the industry. The investments include improvements to Delta’s fleet, facilities and technology.
The 737-900ER will be Delta’s first aircraft to feature Boeing’s new “Sky Interior,” which offers expanded carry-on baggage space, a roomier, more airy cabin and an LED lighting system that provides different color schemes, such as a soft blue sky and a relaxing pallet of sunset colors.