For Delta, the price tag rules

price-tag-images.jpgDelta’s decision to opt for the Boeing 737-900ER instead of the re-engined version unveiled by the airframer as part of the massive order announced by American last month might leave some scratching their heads. 

My colleague Jon Ostrower has broken a superb piece in which sources indicate the re-engined options from both Boeing and Airbus were excluded from the competition.

Why would Delta, who has openly lavished praise on the PW GTF powering the Bombardier CSeries and A320neo, opt not to include those aircraft in its final evaluations? 

One theory is that Delta puts more weight on ownership cost in aircraft purchases than on promised efficiency improvements.  The carrier has been snagging up used MD-90s like mad during the last two-to-three years, and its chief executive Richard Anderson has stated its the economics that make the aircraft so attractive — here’s what he had to say in July of 2009.

The MD-90 has “far superior economics to a 737-800 and a very similar range and customer attributes”. Furthermore, Anderson says the capital cost of the MD-90 is “a small fraction of the capital cost of a new Airbus or Boeing 737-800″. 

So let’s just say Boeing gave Delta a deal it couldn’t refuse on the -900ERs. That could suddenly diminish the attractivness of a re-engined aircraft that so far (with the exception of some fan size estimates) remains largely undefined.

And let’s not forget the strong message Anderson sent to sharholders during the carrier’s Q2 earnings call desribing the upcoming order. 

“Let me be crystal clear about it, because it is important to our shareholders. We’re not buying shiny objects here. Our goal is to improve our P&L [profit and loss] with a modest order of airplanes.”

One final thought to remember is American hasn’t firmed up its pledge for 100 of the re-engined 737s yet, nor has Boeing’s board given the official go-ahead.

 

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