Delta Follows Up Huge Bombardier Order with Pretty Big Airbus Order

Delta is on an aircraft buying spree and Airbus is the latest manufacturer to benefit from its shopping frenzy.

Following yesterday’s announcement of the largest Bombardier CS-100 series order placed by any airline, valued by the manufacturer at $5.6 Billion at list prices, Delta has just announced an order for 37 new A321s worth $4.25 Billion, list.

“The Airbus A320 family of aircraft continues to be a cost-efficient, reliable and customer-pleasing mainstay of our narrowbody fleet,” said Ed Bastian, Delta’s incoming chief executive. “The order for the A321s is an opportunistic fleet move that enables us to produce strong returns and cost-effectively accelerate the retirement of Delta’s 116 MD-88s in a capital efficient manner.”

With these additional aircraft, Delta’s A321 fleet will grow to 82.

“Delta is focused on reshaping its narrowbody fleet with customer-focused aircraft that offer lower operating costs and better fuel efficiency. The 37 aircraft will be delivered concurrently with existing A321 orders through 2019,” the airline explains in its announcement. The purchase is part of Delta’s plan to replace 20% of its mainline narrow body fleet over the next five years.

Delta believes this fleet strategy fits the company’s long-term financial targets, including 15% EPS growth and an additional $4-5 billion in free cash flow annually.

There are additional benefits to meet environmental targets and reduce fuel consumption with these aircraft, including wingtip Sharklets which expected to improve fuel efficiency by 4%.

New Interiors

Like the Delta’s new CS-100 aircraft, these new A321s have modern interior designs including high-capacity overhead bins, latest generation in-flight entertainment (IFE), lighting, power outlets a every row, in-flight Wi-Fi and Delta’s streaming entertainment Delta Studio.

Airbus is Pleased

“Delta is an industry leader in many ways, not the least of which is contributing to the trend toward larger, more fuel-efficient aircraft for their single-aisle fleet,” said John Leahy, Airbus Chief Operating Officer – Customers. “The A320 Family continues to be the backbone of every airline in the world that is paying attention to what their passengers want and their investors need. In 2015, nearly 40 percent of our A320 Family deliveries were A321s, up some 10 percent from the previous year. Our customers, like Delta, know where to find the best comfort, economy and reliability.”

Airbus need some good news after Al Baker’s harsh statements in the press this week. Delta’s had to contend with Al Baker too, as he’s been visiting Atlanta. I’m not suggesting these three things are connected. Let’s just call them serendipitous.