Delta Purchases Boeing Max Planes

Atlanta-based Delta buys 100 Boeing Max planes. It’s the carrier’s first major purchase of new aircraft from Boeing in more than a decade. The deal includes options to buy another 30, Delta Air Lines announced earlier this week. 

Delta made the announcement at the Farnborough Airshow and said deliveries of the new Boeing 737 Max 10 jets are slated to begin in 2025. This move is good news for Boeing as Airbus recently won high-profile sales, including among China’s state-owned airlines. The US manufacturer expressed trade tensions when that order was announced. 

How Much Does Delta’s Order Cost? 

The order is worth about $13.5 billion at published prices, but discounts are expected, especially for bulk orders. Delta didn’t mention how much it paid but revealed the purchase wouldn’t affect its latest capital expenditure forecast.

Delta said it would modernize its narrow-body fleet as they plan to capitalize on a rebound in travel following the downtrend due to the COVID-19 pandemic. Likewise, the Max planes would be 20% to 30% more fuel-efficient than the current jetliners they will replace.

Delta is one of the top four US airlines that haven’t ordered new Boeing planes in recent years, favoring Airbus as it improved its narrow and longer-range wide-body fleet. During the pandemic, they gave up older Boeing 777s and had been taking more deliveries of Airbus A350 twin-aisle jetliners. 

The 737 Max has been banned for at least 18 months following the second of two fatal crashes that killed 346 people. The US lifted the ban in November 2020. During that period, Delta’s competitors experienced capacity constraints because of paused deliveries of new Max planes.

Why is Delta Compelled to Buy this Max Model?

The Max 10 model is the largest of the narrow-body Max family and doesn’t have government approval yet. Boeing hopes to win support for the planes before the end of the year, ahead of the regulation passed in the wake of the two crashes requiring new aircraft to be outfitted with a cockpit alert system going into effect. However, lawmakers could provide Boeing with a waiver.

“We have to make our case, and it has to be persuasive, and we believe it is,” Boeing CEO Dave Calhoun told CNBC.

Delta expects the Federal Aviation Administration (FAA) to sign off on the planes next year.

Delta’s CEO, Ed Bastian, had previously mentioned its plan to order Max planes. When interviewed at a recent investor conference about a potential order of the narrow-body planes, Bastian said, “We’ve been attempting to close a deal with Boeing on that. Hopefully, we will be able to figure that out.”

Delta will design the plane with 182 seats: 129 in standard economy, 33 in Comfort+ with extra legroom, and 20 seats in first class.

Most of Delta’s new aircraft in recent years came from Europe’s Airbus.

In 2017, Delta was caught in a trade dispute between Boeing and Canada’s Bombardier, the then-producer of C-Series narrow-body planes which Delta ordered. Boeing accused Bombardier of selling the planes below cost, but they eventually lost the case. Airbus later took over the program, renaming the plane A220.

As the news saying Delta buys 100 Boeing Max planes broke out, there have been slight changes in stock prices. Boeing shares gave up earlier gains as the broader market fell, ending Monday with little change, while Delta shares rose 3.5 percent. 

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