Delta Snubs Boeing, Orders 100 Airbus Jets

Delta Air Lines Inc. (NYSE: DAL) made official Thursday morning that it will purchase 100 single-aisle A321neo passenger jets from Airbus and take an option on an additional 100. At list price the order is valued at around $12.7 billion, not including the options.

All the new planes will be equipped with Pratt & Whitney geared turbofan (GTF) engines. First delivery is expected in the first quarter of 2020.

This is a harsh blow to Boeing Co. (NYSE: BA), which has now lost the last two major competitions for sales to Delta. Earlier this year Canada’s Bombardier sold 75 of its CS-100 passenger jets to Delta in a deal that Boeing has charged as dumping and that already has resulted in a recommended tariff of 300% on each plane Delta imports.

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According to fleet data at Planespotters.net, Delta currently has 175 Boeing 737s in its fleet, 88 of which (737-900s) average just 2.3 years of age, with four more still to be delivered.

Airbus counts 151 single-aisle planes in Delta’s existing fleet, include 30 A321s with another eight still to be delivered. These are the previous version of the A321neo model in the new order.

Retiring Airbus sales chief John Leahy said:

This purchase furthers our commitment to U.S. aviation — a commitment that has never been stronger. Today, there is more U.S. content in Airbus aircraft than from any other country, with more than 40 percent of our aircraft-related procurement coming from the United States. In addition, our workforce at the U.S. Manufacturing Facility in Mobile, Alabama is proud that they will be delivering many of these A321neos to Delta in the coming years.

In addition to the engines, Delta announced a long-term commitment from Pratt & Whitney, a division of United Technologies Corp. (NYSE: UTX), for Delta’s TechOps group to be a major maintenance, repair and overhaul (MRO) provider for the GTF engines on the A321neo and the CS-100. Boeing, which is trying to build its service operations into a $50 billion business, may have balked at a request from Delta for the same thing.

Delta’s shares traded up about 2.1% shortly after the opening bell, at $54.75 in a 52-week range of $43.81 to $55.75.

Boeing’s stock traded up about 1.1%, at $295.00 in a 52-week range of $153.06 to $296.80, a new high posted earlier this morning.

Airbus shares traded down about 0.2% in Paris, at €86.11 in a 52-week range of €61.73 to €89.27.

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