Delta Will Wait For New Planes To Prove Themselves: CEO

By Reuters

As planemakers try to get airlines to buy their newest designs, prices on existing models become heavily discounted. Established models also tend to be more reliable as early technical problems are ironed out.

‘PROVEN PRODUCTS’

“We would rather see proven products that have cash-on-cash returns from the moment we take delivery,” Anderson said. “That is much more important.”

While manufacturers are playing up double-digit percentage reductions in fuel costs in their newest models, which are equipped with more fuel-efficient engines, Delta prefers to buy aircraft toward the end of their production cycle when prices are lower.

“The airplane salesmen always show you charts that have these big operating savings,” Anderson said. “But the charts never have the capital cost, so it is a little bit of a fallacy to analyze airplanes without the capital costs included.”

Airbus recently began talking up the lower ownership cost of its A330 wide-body jet as it defends the model against a proposed new stretched version of Boeing’s Dreamliner called the 787-10X. Airbus told a U.S. industry conference in March that the A330, whose sales have held up better than expected due in part to 787 delivery delays, could compete with the 787, implying price discounts to outweigh higher fuel consumption.

“We operate 33 A330s and were a launch customer in the U.S.,” Delta’s Anderson said. He added that should Boeing hope that its stretched 787 will take sales from the A330, “its prices have to come way down.”

Anderson declined to comment on reports that Delta is looking at placing orders for around 20 narrow-body jets and 20 current-generation, wide-body A330s or Boeing 777s.


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