Delta Air Lines Inc. scrapped an order for 18 Boeing Co. widebody Dreamliner jets valued at $4 billion at list prices, a commitment that was inherited with the company’s 2008 merger with Northwest Airlines.
Atlanta-based Delta reached an agreement with Boeing on the cancellation, without disclosing terms, according to a statement from the carrier Tuesday. The airline is sticking with orders already in progress for 120 narrowbody Boeing 737-900ERs. The 787-8 Dreamliners had been on Delta’s order book since the Northwest Airlines deal.
“This business decision is consistent with Delta’s fleet strategy to prudently address our widebody aircraft needs,” Greg May, Delta’s senior vice president of supply chain management and fleet, said in the statement.
Boeing fell less than 1% to $156.61 in mid-morning trading. The shares had climbed 8.9% this year through Tuesday. Delta declined 1.4% to $49.65.
Delta’s decision had been predicted. While some Northwest pilots held out the 787 as a “star,” known for its fuel efficiency and a body made of composite materials, some of Delta’s 777 aircraft had nearly the same capabilities, said Bob Mann, head of aviation consultant R.W. Mann & Co. in Port Washington, New York. Also, Delta tends to fly bigger planes on average than its peers, and the larger 777 is more consistent with that strategy than the 787, Mann said.
“I wasn’t surprised, but I was surprised they took 10 years to do it,” Mann said of the cancellations.
U.S. airlines have been deferring or canceling orders for widebody jets, the long-haul aircraft that have two aisles. Delta earlier this year deferred taking four Airbus Group SE A350s until 2019 and 2020, instead of 2018 as originally scheduled. American Airlines Group Inc. also said this year that it would take 22 A350s an average of 26 months later to cut capital expenses.
Delta still has widebody orders for 25 A350s and 25 smaller A330neo planes on its books. The 787s have a list price of $224.6 million, although large discounts are customary for major airlines.
“We’ve been working closely with Delta as their needs have evolved since inheriting the order from Northwest,” said John Dern, a spokesman for Chicago-based Boeing. “Delta is a valued customer and we continue working with them to meet their future fleet requirements. Customer interest in the 787 continues to be strong, with almost 1,200 orders to date.”
By Michael Sasso
