Anderson: Goal is to improve profit and loss with a modest order of aircraft

Washington DC
This story is sourced from Pro
See more Pro news »

Delta's narrowbody selection is not likely to rival the scale of the whopping 460 order recently placed by American as the Atlanta-based carrier stresses debt reduction remains its top priority.

During a 27 July earnings call Delta CEO Richard Anderson declared: "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."

Delta in January of this year issued and request for proposal for the replacement of 100 to 200 narrowbody aircraft - Airbus A320s, Boeing 757-200s and DC9-10s.

Outlining Delta's logic, Anderson explained Delta thinks of aircraft in terms of replacement capacity and the intersection of free cash flow.

Noting 30 year old aircraft require a significant amount of cash to maintain, Anderson stated Delta does almost a "shell by shell" analysis to determine if an aircraft can improve Delta's P&L and generate free cash flow.

Delta's bias is also towards owning aircraft, said Anderson. "We don't want the residual value to belong to someone else."

Asked if the changes in delivery positions resulting from American's order would pressure Delta to place a larger order, carrier President Ed Bastian stated: "Absolutely not."