ATLANTA (Reuters) - In the biggest used-plane sale ever, Delta Air Lines Inc. (NYSE:DAL - news) said Thursday it will sell 119 Boeing 727 aircraft it is retiring to a unit of United Technologies Corp. (NYSE:UTX - news) which will convert the airliners into cargo planes.
The aging aircraft and 39 spare Pratt & Whitney engines will be sold over the next six years as they are phased out of Delta's fleet, the airline said in a statement. The sale price was not revealed.
The agreement in principle will result in the largest ever used aircraft fleet transaction in terms of number of aircraft. United Technologies' Pratt & Whitney unit said it is working with Republic Financial Corp. of Denver to market the aircraft, whose average age is 21 years, after converting them to carry cargo.
``This agreement creates several advantages for Delta as we look toward the scheduled retirement of our 727 aircraft,'' said Warren Jenson, Delta's executive vice president and chief financial officer. ``It provides a known buyer for these aircraft and spare engines at predetermined prices and dates, enabling us to manage our planned 727 phase-out.
``Furthermore, the transaction provides substantial incremental cash flow over the remaining scheduled operational life of Delta's 727 fleet, and it is accretive to earnings over the same period. This agreement enables Delta to maintain our current schedule for 727 retirements without concern for future fluctuations in the used aircraft market.''
Delta said around 20 of its 727-200 aircraft will be retired in 1999, with the rest being phased-out through 2005 as the airline replaces them with newer planes. After selling off the 199 planes, Delta will still have four 727's, a spokeswoman said.