$770 Million Narrowbody Revamp Will Boost Delta's Capacity

By Sean Broderick sean.broderick@aviationweek.com
Source: AWIN First

Delta declined to comment on the suppliers for the new cabin work, but RBC Capital Markets analyst Robert Stallard reports that B/E Aerospace will supply its Pinnacle line of seating as well as lighting, galleys and other cabin upgrades. The in-flight entertainment supplier is Panasonic, Stallard says.

The investments and capacity bumps fit into Delta’s strategy of growing while minimizing overhead. Delta has put its 2014 capacity growth forecast at about 2% while operating 10 fewer aircraft (Aviation Daily, Dec. 13). A combination of upgauging—both by replacing smaller aircraft with larger ones and adding seats to existing airframes—will make the numbers work, Delta executives say.

The introduction of the first of 88 ex-Southwest Boeing 717s late last year is part of the process, as they are bumping some 50-seat regional jets from Delta’s schedule.

The investments also underscore Delta’s commitment to get the most out of its existing assets by investing to keep older planes reliable—via strategies like liberal spares provisioning, including in some cases buying entire aircraft for parts—as well as appealing to passengers.

“[W]hen you get on an airplane, if it’s well-maintained, it’s clean and it has a new interior on it, you really don’t know how old it is,” Hauenstein said last month at the airline’s annual investor day. “[A]re customers really willing to pay you for that [airframe] newness? I haven’t seen it.”

RBC’s Stallard points to Delta’s move as a potential harbinger among U.S. carriers.

“[T]he bigger picture positive is that we think this is a concrete sign of a pick up in airline retrofit spending,” Stallard notes. “With capacity expansion plans in place and global airlines in the black we think those with more dated fleets, such as the U.S. mainlines, will be investing in their cabin product in order to better compete, particularly in the higher margin business class product.”

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