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Delta signs massive CRJ deal

Graham Warwick/WASHINGTON DC

Delta Air Lines has signed a $10 billion, 500-aircraft, regional jet deal with Bombardier which will provide Delta Connection carriers with 40-, 44- and 50-seat versions of the Canadair Regional Jet (CRJ) 200, and 70-seat CRJ700s. The yet-to-be launched 90-seat CRJ900 is not included.

Delta Connection carriers Atlantic Southeast Airlines (ASA) and Comair have signed letters of intent to order 94 CRJs for delivery between the first quarter of next year and the end of 2004. When finalised, this will take the number of CRJs purchased by ASA and Comair to 281, 125 of which have been delivered.

The deal includes options on 406 CRJ200s and 700s, for delivery by 2010. "This order will allow fulfilment of long-term fleet growth plans at ASA and Comair," says Delta Connection president David Seibenburgen.

Key to the deal is Bombardier's commitment to supply 40- and 44-seat versions of the 50-seat CRJ200 to meet the carriers' requirements for small regional jets. All three versions are identical - except for the number of seats - but the deal is structured so that the 40- and 44-seat aircraft cost less than the 50-seater. This allows the CRJ to be competitive with other 40-44-seat regional jets, Bombardier says.

Bombardier president Bob Brown says the ability to deliver 40- and 44-seat versions of the CRJ with competitive economics is a result of agreements with suppliers, production efficiencies and the commonality and flexibility that a family of 40-70-seat aircraft offers Delta Connection.

Because their viability is linked to the economies of scale afforded by the large Delta order, the manufacturer is not offering the 40- and 44-seat CRJs to all customers. "We are being selective in our discussions," says Brown. "The focus is on larger customers."

The deal will allow ASA and Comair to begin replacing their remaining turboprops with regional jets. "The 40- and 44-seat jets are primarily for turboprop replacement," Seibenburgen says. Replacing ASA's large fleet of 30-seat Embraer Brasilias is a "high priority", he says that could begin as early as June. Comair also plans to phase out its Brasilias.

The CRJ deal is the first fleet purchase for Delta Connection, formed last year after ASA and Comair became wholly owned subsidiaries of Delta. The 94 firm orders, valued at $2 billion, consist of twenty-five 40-seaters and twenty 44-seaters, all for Comair; twenty-four 50-seaters, for ASA and twenty-five 70-seaters - 18 for ASA and seven for Comair. The 406 options can be exercised as a mix of 40-, 44-, 50- and 70-seaters.

Delta's pilot scope clause limits Connection operations to aircraft with 70 seats or fewer. Bombardier says there is no provision in the deal to exercise any options as 90-seat CRJ900s.

"They would have to renegotiate to add CRJ900s," says Brown. Bombardier is "working hard" to launch the 90-seater in the second quarter, he says.

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