Delta Air Lines is open to aircraft leasing opportunities for its upcoming deliveries, but maintains fleet ownership is the carriers preferred financing method.
"We rather own aircraft, it is easier that way, but we will play it [fleet ownership] the way it plays out. It is not a matter of focusing on what is our ownership and leasing ratio, but rather which method offers the best economic pricing," said Nathaniel Pieper, vice-president of strategy and transactions at the carrier, speaking at the Ascend 2020 Finance Forum in San Francisco
Approximately 85% of the fleet is owned, but the carrier has entered operatng leases, such as its recent Boeing
717 agreement with Southwest Airlines
, when the "opportunity makes sense".Delta
has agreed to lease 88 717s from Soutwest, which is removing the type from its AirTran Airways
subsidiarys fleet. It anticipates having 16 in its fleet by the end of the year and all 88 by the end of 2015.
Pieper likens Delta's fleet strategy to a game of gin rummy: "we have all kinds of cards of every suit and every number. And while I would love to trade all my twos and threes for kings at one point, there is a lot of value in discarding twos and threes and taking sixs and sevens."
He admits Delta has done "very well" with its fleet ownership strategy for the past 30 years by "getting the most amount of economic life out of the asset" that it possibly could.
The airline has 19 Boeing 737-900ER deliveries scheduled in 2014, Flightglobals Ascend Online database shows. Its regional subsidiary Endeavor Air
will receive 28 Bombardier
Operating lessors are expected to increase their funding levels in the commercial aviation market during the next decade.
In a finance report, issued this month, operating lessor Avolon said operating lessors are tipped to fund $35 billion in aircraft this year, and more than $40 billion in 2014 - levels that are equivalent to the industry's total funding requirement from all financing channels a decade ago.