Delta will wait for new planes to mature: CEO
By Karen Jacobs
(Reuters) - Delta Air Lines (DAL.N: Quote) is letting a wave of orders for the newest planes on the market roll by, giving the jets time to prove themselves before buying, its chief executive told Reuters on Wednesday.
While other airlines have ordered more than 3,000 of the next generation narrow-body models, the Boeing 737 MAX and the Airbus A320neo, Delta says it is playing it safe.
"We'd rather get toward the end of a production line" and buy the jet after it has the kinks worked out and has been lengthened to hold more passengers, Chief Executive Officer Richard Anderson said in an interview at Reuters' New York headquarters.
The economics of stretched planes, he said, "are always better than the original economics."
Delta stands out its willingness to take a different tack than its rivals. On Friday, it will unveil a $1.2 billion overhaul and expansion of its passenger hub at New York's John F. Kennedy Airport that, along with new interiors on older jets, will make its offering more competitive in that key market.
But as it grows globally, Delta faces rising pressure from tougher U.S. peers and from foreign airlines that are aggressively buying new planes, often with help from the U.S. Export-Import Bank.
Robert Mann, an airline consultant in Port Washington, New York, said Delta has been able to focus on improving its business as United Continental (UAL.N: Quote), US Airways Group LCC.N and American Airlines are distracted by mergers. But he expects competition among the major U.S. carriers to ramp up once the restructurings are completed.
Delta "has enjoyed a multi-year lead and they've capitalized well on it, but competition doesn't stand still," Mann said. Continued...