Delta sees margin gains from regional fleet renewal

Washington DC
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Delta Air Lines is posting “solid margin improvements” from its regional fleet renewal programme, says chief executive Richard Anderson.

Speaking during an earnings call today, he says that the Atlanta-based SkyTeam alliance carrier has seen the improvements where it has replace 50-seat regional jets with either 76-seat regional aircraft or 110-seat mainline Boeing 717-200s.

While Delta does not disclose specific margin gains for the markets impacted, its operating margin was 8.5% during the fourth quarter, according to its president Ed Bastian. He adds that this is a 300bp improvement compared to a year earlier.

The carrier removed at least 53 50-seat regional jets, which include Bombardier CRJ200 and Embraer 145 aircraft, in 2013, based on previous management comments. It added 39 aircraft to its mainline fleet, including 12 717s.

Delta’s regional subsidiary Endeavor Air took delivery of 12 Bombardier CRJ900s during the year, Flightglobal’s Ascend Online database shows.

Looking forward, the airline plans to remove about one-third of its 50-seat regional jet fleet – about 80 aircraft – in 2014, says Delta president Ed Bastian.

Delta is scheduled to take delivery of 17 Boeing 737-900ERs and Endeavor 25 CRJ900s during 2014, according to Ascend. Both carriers have already taken delivery of two aircraft each in January.

In addition, Delta has said that it will add 36 717s to its fleet during the year.

The airline anticipates $250 million in maintenance expense savings from the retirement of 50-seat regional jets in 2014, says Paul Jacobson, chief financial officer of Delta, during the call today.