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jagraham
Posts: 1100
Joined: Sun Jul 17, 2016 11:10 pm

Re: DL looking to trade 717s for 100 737 Max

Wed Apr 22, 2020 9:40 am

WidebodyPTV wrote:
jagraham wrote:

And it may turn out that DL is looking at leasing 737MAXes. in which case there would be little if any upfront expense. Especially if a 717 trade is part of the deal.

These negotiations could be brutal indeed.


Leasing is simply a form of financing; even GAAP now requires leases obligations to be reported as debt. Aircraft are generally financed in some form... even aircraft that are paid for in full with cash, are usually either mortgaged or sold then leased back afterward. Just as if you were considering buying or purchasing a car, there's advantages and disadvantages to different forms of aircraft financing.

But DL owns only 13 B717, the other 78 are leased from Boeing. If DL "trades in" those 78 B717 to Boeing, it's certainly not to their advantage. Think about it this way... if you still owed $2500 in lease payments on your car, and your contract specified a purchase option that is at or greater than the car's market value (which is typical of operating leases), would it be to your advantage to trade your leased car in? Of course not -- you will still owe that $2500, whether you keep the car or give it back to the finance company.

In DL's case, it's deceptive to say they're looking at trading in the 717 for MAX. If the rumor's true, then what they're really doing is seeking financial relief from Boeing (e.g. void the lease extension signed last fall) in exchange for agreeing to purchase the MAX.



Leases are debt. Not capital. Leases are expensed as they are paid, while capital purchases often require significant upfront cost that have to be amortized over a period of years. From a tax and from a cash flow perspective, leases are better, all other things being equal. especially if the asset will not be held beyond the lease term.

And if DL seeks financial relief from Boeing (they are the only US major not receiving MAX compensation, for whatever that's worth) by trading in 717s, it's up to Boeing to decide whether to send DL some money or keep the same terms.

Also, the scope issue (more 75 seat RJ flying in exchange for more 110 seat mainline flying) is significant. No MAX fits in the scope, unless DL plans to do a UA and stick an extra big first class in some MAX7s. DL wanted that 75 seat RJ flying real bad and now benefits from it; without scope relief from the pilots union, whittling down the 717 fleet whittles down the 75 seat RJ fleet. Not a big deal right now, but once flying starts to come back it's a really big deal. Because RJs have higher CASM, but lower trip costs by at least half. And if you're going to be flying a plane more than half empty, better to cut the expenses in half. Fly the smallest thing that can fly the route. Which by the way, for mainline, is the 717 after the A220.

And those who feel DL is going to take the capital expense of an extra 50 or more A220s in the next couple of years, well that ain't happening.
 
JFK2DTW
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Re: Rumor: DL looking to trade 717s for 737 Max

Wed Apr 22, 2020 9:50 am

I highly doubt this is true. Delta was thankful for not having MAX jets, as they had full aircraft from the time that happened until the start of the corona virus.
 
WidebodyPTV
Posts: 265
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Re: DL looking to trade 717s for 100 737 Max

Wed Apr 22, 2020 11:32 am

jagraham wrote:
Leases are debt. Not capital. Leases are expensed as they are paid, while capital purchases often require significant upfront cost that have to be amortized over a period of years. From a tax and from a cash flow perspective, leases are better, all other things being equal. especially if the asset will not be held beyond the lease term.


You're a little misguided here. Larger airlines typically prefer to purchase aircraft rather than lease them. As you know, aircraft are sold at heavy discounts in large orders; when aircraft are leased, the lessor (the lender) is the primary recipient of the discount. There's also a larger tax benefit earlier when purchasing (and even though DL will report a loss in the short-term, they can carry this benefit over to when they're profitable again). Aircraft that are purchased (as opposed to leased) are typically financed up front, encumbered or sold & leased back later. Leasing can require large payments upfront, although annual cash outflows are smaller than if the aircraft had been purchased and financed in some form. Ultimately, for an airline like DL, a direct lease (as oppose to sale & lease back) will likely be more costly than had they purchased the aircraft, so I doubt they'll explore that option.

And if DL seeks financial relief from Boeing (they are the only US major not receiving MAX compensation, for whatever that's worth) by trading in 717s, it's up to Boeing to decide whether to send DL some money or keep the same terms.


If Boeing has a valid lease agreement with DL (e.g. DL signed the extension), of course it's their decision. That DL isn't receiving MAX compensation, won't impact it (DL ordered the NEO, after all). But if Boeing says no, it's improbable that DL would return the 717, anyway, when they're stuck paying for the aircraft for another decade.

Also, the scope issue (more 75 seat RJ flying in exchange for more 110 seat mainline flying) is significant. No MAX fits in the scope, unless DL plans to do a UA and stick an extra big first class in some MAX7s. DL wanted that 75 seat RJ flying real bad and now benefits from it; without scope relief from the pilots union, whittling down the 717 fleet whittles down the 75 seat RJ fleet. Not a big deal right now, but once flying starts to come back it's a really big deal. Because RJs have higher CASM, but lower trip costs by at least half. And if you're going to be flying a plane more than half empty, better to cut the expenses in half. Fly the smallest thing that can fly the route. Which by the way, for mainline, is the 717 after the A220.

And those who feel DL is going to take the capital expense of an extra 50 or more A220s in the next couple of years, well that ain't happening.


You're stubborn with this thought, but you need to accept reality. The scope clause is largely irrelevant at this point. To begin with, DL already operates 31 A220 and will likely continue to operate a portion of the 717 fleet (including the 13 aircraft it owns) -- in arbitration, the intention of a specific clause is inferred, and it'd be shocking if the A220 weren't accepted as small narrowbodies. But the thing is... it doesn't really matter at this point. If DL files for bankruptcy and rejects its agreement with the ALPA, the ALPA's membership base stands to lose a lot more. If you've never been part of a union, I'll explain how brotherhood and unity works: if a veteran DL pilot is in position of supporting a contract that protects his compensation, or one that protects his co-workers jobs - but in doing so, he faces the prospect of seeing his compensation cut, he'll vote for himself and screw the other guy nearly every single time.

And the 717s have been used primarily to link smaller communities to the larger hubs, and to build frequency at ATL. As I mentioned earlier, it took 4-7 years for most communities to surpass their pre-Great Recession traffic levels. As it is, DL intended to keep the 717 for only ~10 more years, with the aircraft serving as "flex" capacity in later years. At this point, it's easy to see why DL would believe it just doesn't need the capacity going forward, and to resume A220 deliveries when it does...
 
sdexplorer00
Posts: 50
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Re: Rumor: DL looking to trade 717s for 737 Max

Wed Apr 22, 2020 11:54 am

“ Delta wants to give it 717s to Boeing BA and in exchange Delta would order 100 737 MAX aircraft, the Air Current reported. The MAX family, which starts at around 150 seats, would not be a direct replacement for the 110-seat 717. Instead the MAX aircraft would be part of a larger fleet shuffle.”

https://www.forbes.com/sites/willhorton ... -aircraft/
 
LightningZ71
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Re: Rumor: DL looking to trade 717s for 737 Max

Wed Apr 22, 2020 12:05 pm

I don't think that I've seen anyone bring it up yet, but, with the accelerated retirement of the super 80s and md90s, doesn't the incremental cost of operations for the 717 increase? While being substantially newer, it is my understanding that the 717 does share some maintenance resources with the supers, and that by not sharing those resources any longer, the cost of those resources is ortized over fewer frames. Given that, and their current cash flow crunch, on the surface, it seems obvious that Delta would want to find any way possible to get out of the cash flow burden of those leases in the short term (leases that Boeing would loose if Delta declares bankruptcy). That being the case, a deal with Boeing to do so would have to include some sort of benefit for them, and a large order for 737-MAX aircraft, for which there will absolutely be many open production slots available in the coming years, would certainly be something that they would want.

For Delta, it is reasonable that the lift provided by the 717 just won't be needed for the next year or so, in that they likely have a higher trip cost than the A-221 and similar costs to the 737s that Delta has (again, I'm assuming higher upkeep costs due to the loss of the super 80s). For Delta, it's reasonable to assume that Boeing will either get their MAX mess sorted out, or, if they don't, Boeing would breach the delivery contract in terms favorable to Delta. It's a win/win for Delta either way. The worst case scenario for Delta is that traffic comes booming back in the fall (highly unlikely), Boeing gets the MAX sorted on time and expects a financially crippled Delta to take delivery on the frames (if Delta is hurting that badly by then, the whole industry is likely on fire), and some sort of emergency AD grounds all of the A220 fleet, leaving Delta without any smaller airworthy frames.

As for the 717s themselves, neither HA or Quantas will be in a position to purchase anything for a while. They are likely to sit in the desert for a long while, with HA picking up a few over time, maybe Quantas. The rest may serve a startup airline that wants to serve communities that can't get mainline or regional due to scope limitations on available frames for the majors. Perhaps for a startup that was eyeing starting with a newer frame of similar size, but finds a way to wiggle out of those orders and purchases substantially cheaper 717s from Boeing, which is eager to get them off the books. (Or maybe leases them, who knows).
 
MIflyer12
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Re: DL looking to trade 717s for 100 737 Max

Wed Apr 22, 2020 12:18 pm

WidebodyPTV wrote:
If DL files for bankruptcy and rejects its agreement with the ALPA, the ALPA's membership base stands to lose a lot more.


I don't believe a labor agreement is a contract the firm can reject in a Chapter 11 bankruptcy. It can ask the judge to modify the agreement - but that doesn't always work. I can't imagine a judge fundamentally altering the structure of an agreement by throwing out scope. Examples?
 
sxf24
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Re: Rumor: DL looking to trade 717s for 737 Max

Wed Apr 22, 2020 12:34 pm

Waterbomber2 wrote:
The B717 fleet is probably very cheap to lease. It has no market outside of DL.
It's a dinosaur on its way out about to be replaced by the A220.
This fleet probably isn't that big a burden on DL.

In addition, I would be shocked if lease contracts didn't have some form of force majeure clause.


Leases do not have force majeure clauses.

Leases can be amended through mutual agreement during situations like this, but otherwise the operator is required to pay as agreed.
 
DLPMMM
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Re: Rumor: DL looking to trade 717s for 737 Max

Wed Apr 22, 2020 12:35 pm

ACA772LR wrote:
All of this and DL wants to downsize their fleet, makes no sense


If Boeing allows DL to end the leases on the 717 immediately on signing, then DL sheds 91 planes and the associated lease costs very quickly, helping their short term liquidity and reducing the number of parked planes.

DL can then add back capacity slowly over several years as deliveries of the MAX are made.

Boeing takes the hit in their financials now when they are already in the pits and gets a boost for the MAX program.

It makes some sense.
 
Nicknuzzii
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Re: Rumor: DL looking to trade 717s for 737 Max

Wed Apr 22, 2020 12:40 pm

DL has cut their fleet to about 650 aircraft, about 20% smaller.
 
WidebodyPTV
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Re: DL looking to trade 717s for 100 737 Max

Wed Apr 22, 2020 12:41 pm

MIflyer12 wrote:
WidebodyPTV wrote:
If DL files for bankruptcy and rejects its agreement with the ALPA, the ALPA's membership base stands to lose a lot more.


I don't believe a labor agreement is a contract the firm can reject in a Chapter 11 bankruptcy. It can ask the judge to modify the agreement - but that doesn't always work. I can't imagine a judge fundamentally altering the structure of an agreement by throwing out scope. Examples?


It’s complicated, but they could seek a modification or outright reject the agreement:

https://dealbook.nytimes.com/2012/03/02 ... contracts/
 
Boof02671
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Re: Rumor: DL looking to trade 717s for 737 Max

Wed Apr 22, 2020 12:49 pm

Not true you have Section 1113 C of the bankruptcy code. No more blanket abrogation like Lorenzo had at CO.
 
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NWAROOSTER
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Re: Rumor: DL looking to trade 717s for 737 Max

Wed Apr 22, 2020 12:58 pm

Delta is not going to replace a 717 with any 737 much less a 737-MAX. They will keep the 717s until at least the leases expire and replace them with more A220s if needed. :old:
Procrastination Is The Theft Of Time.......
 
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Polot
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Re: Rumor: DL looking to trade 717s for 737 Max

Wed Apr 22, 2020 1:05 pm

NWAROOSTER wrote:
Delta is not going to replace a 717 with any 737 much less a 737-MAX. They will keep the 717s until at least the leases expire and replace them with more A220s if needed. :old:

Obviously the 737 wouldn’t be directly replacing the 717. They would be replacing the A320/older 737s while the 717 fleet shrinks/gets replaced by A220s. The pre-covid strategy of upgauging to larger narrowbodies and having nothing on order between the A223 and A321 in the nearer term is on much rockier ground.

Too many people on this thread are still stuck with pre-Covid-19 DL mindsets. Things, and plans, have changed. By DL’s own acknowledgement things are not going to suddenly and immediately bounce back to pre-virus level. Adjust or things will be very painful.
 
VSMUT
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Re: Rumor: DL looking to trade 717s for 737 Max

Wed Apr 22, 2020 1:09 pm

WidebodyPTV wrote:
Because sources that have been reliable in the past are indicating that DL's considering retiring some of the 777 fleet. Given your username, it's clear your opinion is bias. It's entirely possible that DL feels that it has surplus capacity in the ~300 passenger segment, and that rather than parking the 777, it could sell the 77L to a freight company, and when the time comes, take delivery of a 330 or 350 that is more efficient for its needs. There's been reports for quite awhile that DL had looked into selling its 77L, but there was no interest in the type, particularly as freight companies were parking aircraft. With long-haul passenger flights likely to be in heavy decline over the next several years, this may be the only opportunity DL has to dispose of the type if it really doesn't want them. I don't know either way -- I'm just illustrating why they would sell the type.


Why on earth would they sell them to a freight company when no cargo conversion exists?
 
chiad
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Re: Rumor: DL looking to trade 717s for 737 Max

Wed Apr 22, 2020 1:27 pm

I think that when the Corona dust settles and all passengers on every international flight, and possible domestic flights too, is required to have recently updated "non-Corona infection sertificate", Delta's fleet would look someting like this (in a few years time):
50 A220-100
50 A220-300
127 A321-200
100 A321neo
37 A330-900
39 A350-900
138 B737-900ER

I doubt that we'll have the same freedom to travel like we did pre-corona.
 
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Polot
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Re: Rumor: DL looking to trade 717s for 737 Max

Wed Apr 22, 2020 1:33 pm

chiad wrote:
I think that when the Corona dust settles and all passengers on every international flight, and possible domestic flights too, is required to have recently updated "non-Corona infection sertificate", Delta's fleet would look someting like this (in a few years time):
50 A220-100
50 A220-300
127 A321-200
100 A321neo
37 A330-900
39 A350-900
138 B737-900ER

I doubt that we'll have the same freedom to travel like we did pre-corona.

I doubt DL will leave such a large gap between the ~130 seat A223 and the 180 seat 739. Your fleet is very 180-200 seat heavy (50 130 seaters versus 365 739/A321s).
Last edited by Polot on Wed Apr 22, 2020 1:45 pm, edited 2 times in total.
 
micstatic
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Re: Rumor: DL looking to trade 717s for 737 Max

Wed Apr 22, 2020 1:42 pm

the less 737's of any kind the better. That's my vote
S340,DH8,AT7,CR2/7,E135/45/170/190,319,320,717,732,733,734,735,737,738,744,752,762,763,764,772,M80,M90
 
Gulfstream500
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Re: Rumor: DL looking to trade 717s for 737 Max

Wed Apr 22, 2020 1:42 pm

a. The smallest Boeing 737MAX seats 153 passengers, while DL's 717s seat 110. This makes the CRJ1000 a closer replacement at 97 to 104 seats. :stirthepot: DL already has 200 narrowbody replacements for the MD-88s and MD-90s on order, so a 737MAX would just be a random addition to the fleet, not a replacement for the 717.
b. Could DL not just replace the 717s with a few more A220s (plus some of the A220s already on order), which make for a perfect, 1:1 replacement?
So... when will the Northwest DC-9s be retired?
 
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william
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Re: Rumor: DL looking to trade 717s for 737 Max

Wed Apr 22, 2020 1:45 pm

744SPX wrote:
TTailedTiger wrote:
744SPX wrote:
In the name of God why? To piss off passengers? The flying experience on the 717 is FAR better than any 737 due to the 2-3 seating and consequently wider economy class seats. Another strike against Delta is this is true.


I don't understand comments like these. Everyone said that airlines shouldn't be dependent on one manufacturer after the Max incidents. But does that just go one way? If what was posted upthread is true and Delta is parking the MD-88/90, 717, 777, and 767 then they will be very Airbus heavy.



Boeing is the one who decided to terminate production of the 717 despite it having more advanced engines than the 737NG and being more efficient than the 737-600 and 700. This has nothing to do with Airbus or airlines only buying from only manufacturer.


So what, it was not a profitable airplane for Boeing so they canned it. Just like Airbus canned the A318.
 
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Revelation
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Re: Rumor: DL looking to trade 717s for 737 Max

Wed Apr 22, 2020 1:49 pm

Antaras wrote:
Delta wants the MAX?
Ooops am I sitting on the wrong planet?

DL wants a deal.

WidebodyPTV wrote:
As I wrote earlier, if this rumor is true, it’s likely because DL is on the hook for ~10 more years worth of lease payments on the 717 leased via Boeing Capital and is seeking to return the planes now for minimal penalty, in exchange for agreeing to purchase the MAX later. It’s probable deliveries wouldn’t even begin until later this decade, when the crux of the 737 / 757 / 319 / 320 fleet is aging out.

There’s been some fairly strong pilot rumors that DL had cold feet about keeping the 717 even before the pandemic, so I certainly wouldn’t discount this rumor. Ultimately, it allows DL to get rid of a group of planes it doesn’t want now, in exchange for planes it would’ve likely ordered anyhow later.

Makes sense to me. Get rid of a current obligation in exchange for a future obligation.

I also thought DL wasn't happy with 717 operating costs since the engines needed more frequent heavy maintenance than planned.

744SPX wrote:
In the name of God why? To piss off passengers? The flying experience on the 717 is FAR better than any 737 due to the 2-3 seating and consequently wider economy class seats. Another strike against Delta is this is true.

Ha ha ha ha, someone who thinks airlines haven't figured out that pax shop almost exclusively based on cost.

People will spend hours in a pretzel position to save a few bucks.

IAD787 wrote:
Hey all,

Been a while since I've posted. Just for emphasis here, there were four sources on this particular part (the Delta 717/Max trade) of a much more expansive story about how Boeing and Airbus are keeping airplanes moving to customers. No guarantee the deal materializes as Boeing is loathe to let Delta out of the 717 leases, but this is all very real and bullet proof reporting by any editorial standard. Thanks for reading!

Jon
IAD787

Hi, Jon!

Glad you didn't lose your password! :D

Great scoop -- keep up the good work!

FrenchPotatoEye wrote:
IAD787 wrote:
No guarantee the deal materializes as


Admission that this is BS story is nothing more than the clickbaits.

Thread reported. #fakenews

The quote from the tweet in the first post is "Delta wants to trade its 717 fleet to Boeing for a 100 737 Max jets".

The thread title is "DL looking to trade 717s for 737 Max".

You have no basis for complaint, IMO.
Wake up to find out that you are the eyes of the world
The heart has its beaches, its homeland and thoughts of its own
Wake now, discover that you are the song that the morning brings
The heart has its seasons, its evenings and songs of its own
 
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BN727227Ultra
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Re: Rumor: DL looking to trade 717s for 737 Max

Wed Apr 22, 2020 2:06 pm

I found the "DL wants to downsize" headline to be non-news. Shoot, everyone wants to downsize. They want to downsize until it's time to expand. Econ 101.

in fact, the airline that announces they want to expand in this climate will see their stock go to zero.
 
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Revelation
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Re: Rumor: DL looking to trade 717s for 737 Max

Wed Apr 22, 2020 2:19 pm

BN727227Ultra wrote:
I found the "DL wants to downsize" headline to be non-news. Shoot, everyone wants to downsize. They want to downsize until it's time to expand. Econ 101.

in fact, the airline that announces they want to expand in this climate will see their stock go to zero.

People need to consider our threads on AirBaltic and Vietnam to be special cases: AirBaltic is 80% government owned, VN is 100%. Their secure backing means they can afford to be aggressive in the crisis. Most of the world's airlines cannot.

As above, DL is not looking to expand, they are looking to contract by 98 frames now and grow later in the decade when they hope things are better.
Wake up to find out that you are the eyes of the world
The heart has its beaches, its homeland and thoughts of its own
Wake now, discover that you are the song that the morning brings
The heart has its seasons, its evenings and songs of its own
 
UWPAviation
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Re: Rumor: DL looking to trade 717s for 737 Max

Wed Apr 22, 2020 2:36 pm

If Delta does order the MAX, which I think we all believe is inevitable, the US flyer who is petrified of this plane wont have much choices. DL, AA, UA, WN, AS all flying this plane.
 
MIflyer12
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Re: Rumor: DL looking to trade 717s for 737 Max

Wed Apr 22, 2020 2:40 pm

BN727227Ultra wrote:
I found the "DL wants to downsize" headline to be non-news. Shoot, everyone wants to downsize. They want to downsize until it's time to expand. Econ 101.

in fact, the airline that announces they want to expand in this climate will see their stock go to zero.


There are the 'how', 'how much' and 'how quickly' elements of that discussion.
 
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BN727227Ultra
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Re: Rumor: DL looking to trade 717s for 737 Max

Wed Apr 22, 2020 2:43 pm

Revelation wrote:
BN727227Ultra wrote:
I found the "DL wants to downsize" headline to be non-news. Shoot, everyone wants to downsize. They want to downsize until it's time to expand. Econ 101.

in fact, the airline that announces they want to expand in this climate will see their stock go to zero.


People need to consider our threads on AirBaltic and Vietnam to be special cases: AirBaltic is 80% government owned, VN is 100%. Their secure backing means they can afford to be aggressive in the crisis.


Yep, I forgot about those cases--being a little US-centric, lol.
 
MIflyer12
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Re: Rumor: DL looking to trade 717s for 737 Max

Wed Apr 22, 2020 2:53 pm

UWPAviation wrote:
If Delta does order the MAX, which I think we all believe is inevitable, the US flyer who is petrified of this plane wont have much choices. DL, AA, UA, WN, AS all flying this plane.


Really, you want to go there?

People got back on DC-10s after AA's maintenance failures killed 273 people on AA 191 in 1979.

People got back on MD-8Xs after Alaska's maintenance failures killed 88 people on AS 261 in 2000.

People got back on Bombardier Q400s after repeated landing gear collapses.

People got back on A330s after AF 447 killed 228 passengers and crew.

People got back on DC-10s operated by U.S. carriers for more than a decade after UA 232 in Sioux City.

The guys who argue that MAX crashes will make material numbers of passengers avoid the type are ignorant of flight incident histories or willfully misrepresent them.
 
asr0dzjq
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Re: Rumor: DL looking to trade 717s for 737 Max

Wed Apr 22, 2020 3:14 pm

MIflyer12 wrote:
UWPAviation wrote:
If Delta does order the MAX, which I think we all believe is inevitable, the US flyer who is petrified of this plane wont have much choices. DL, AA, UA, WN, AS all flying this plane.


Really, you want to go there?

People got back on DC-10s after AA's maintenance failures killed 273 people on AA 191 in 1979.

People got back on MD-8Xs after Alaska's maintenance failures killed 88 people on AS 261 in 2000.

People got back on Bombardier Q400s after repeated landing gear collapses.

People got back on A330s after AF 447 killed 228 passengers and crew.

People got back on DC-10s operated by U.S. carriers for more than a decade after UA 232 in Sioux City.

The guys who argue that MAX crashes will make material numbers of passengers avoid the type are ignorant of flight incident histories or willfully misrepresent them.

The guys who say they won't ever fly on a 737 Max are also elements in the union of the set of ignorant people and the the set of people who willfully misrepresent.
I really wish more people would see this.
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Born 22 July 1921 | Died 23 May 2006
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mcg
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Re: Rumor: DL looking to trade 717s for 737 Max

Wed Apr 22, 2020 3:27 pm

bcbhokie wrote:
There's a lot of confusion here as to why this deal makes sense, but it's pretty rational when you break it down. "Trade in" is confusing terminology, but it doesn't necessarily mean a zero cost transaction. Basically:

- Boeing lets Delta out of the 717 leases now. Delta saves the capital cost of paying for them starting immediately, and Boeing gets the airframes back with the opportunity to remarket them if they happen to find any takers. This is a concession to Delta.
- In exchange, Delta agrees to buy new 737 MAX aircraft a few years down the road, likely at a very good but not insane price. By then, travel will hopefully be recovering. Delta gets the fleet renewal they'll need to replace the old airplanes that are now permanently gone with something modern and efficient. Boeing gets a new customer who can take over all the cancelled 737MAX orders that will be coming down the pipe - and a blue chip one at that who can help restore confidence in the plane.

In short, this deal is potentially favorable to both parties. Boeing gets to fill a bunch of production slots by selling to a blue chip customer with a great safety reputation who can help build confidence in the MAX. Delta gets short term cash flow flexibility and can remove an older aircraft from the fleet to rapidly downsize in the short term, and all they need to do in exchange is to agree to buy a slightly troubled aircraft in a few years when it should be the best-validated design in all of commercial aviation.

Boeing is desperate. Delta is a little less desperate but could really use some financial flexibility right now. Both companies should come out smelling like roses from this transaction.


This scenario does make sense. The problem I see is that Boeing has the 717 leases on it's books and if it chooses to forgive those payments I'd think there would be a large write-off. Perhaps they would argue their ability to re-lease those airplanes eliminates the need to write off the leases, but that would seen a stretch to me. Maybe Boeing doesn't care about write-offs as 2020 is likely to a year of giant losses anyway and they are willing to take the negative to secure an important order for a few years down the road.
 
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william
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Re: Rumor: DL looking to trade 717s for 737 Max

Wed Apr 22, 2020 3:29 pm

MIflyer12 wrote:
UWPAviation wrote:
If Delta does order the MAX, which I think we all believe is inevitable, the US flyer who is petrified of this plane wont have much choices. DL, AA, UA, WN, AS all flying this plane.


Really, you want to go there?

People got back on DC-10s after AA's maintenance failures killed 273 people on AA 191 in 1979.

People got back on MD-8Xs after Alaska's maintenance failures killed 88 people on AS 261 in 2000.

People got back on Bombardier Q400s after repeated landing gear collapses.

People got back on A330s after AF 447 killed 228 passengers and crew.

People got back on DC-10s operated by U.S. carriers for more than a decade after UA 232 in Sioux City.

The guys who argue that MAX crashes will make material numbers of passengers avoid the type are ignorant of flight incident histories or willfully misrepresent them.


And people are stuck at home worrying about this pandemic and their livelyhoods. When things start to return the normal people will not know or care what a MAX is. People are worrying about more pressing matters now.
 
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Revelation
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Re: Rumor: DL looking to trade 717s for 737 Max

Wed Apr 22, 2020 3:47 pm

william wrote:
And people are stuck at home worrying about this pandemic and their livelyhoods. When things start to return the normal people will not know or care what a MAX is. People are worrying about more pressing matters now.

I think it will likely be an accident of history that the pandemic will give Boeing a lot of cover with regard to getting MAX back into service without the level of attention it had been getting. Whether MAX RTS is going to be enough to see them through the crisis is a bigger question.
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PhilMcCrackin
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Re: Rumor: DL looking to trade 717s for 737 Max

Wed Apr 22, 2020 3:51 pm

OA940 wrote:
I'm surprised nobody has thought that the 737 MAX has no timeline for EIS, and with the outbreak now it could be a very long time until production goes back to what it was, so what kind of sense does it make to order 100 of them? Not to mention what has already been discussed about ordering 100 new aircraft in the middle of the worst crisis in aviation history


It's going to take years for the airline industry to return to where it was. DL can shed these 717s relatively quickly and gear down for the current state of the industry and push off delivery of the new MAXes for a year or two until the industry is on the way back up. The financial transaction for the aircraft won't take place until the individual airframes are actually delivered.

Presumably, the MAXes would replace the older ex-NW Airbuses, some of which are pushing 30 years old.
 
kimimm19
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Re: Rumor: DL looking to trade 717s for 737 Max

Wed Apr 22, 2020 3:54 pm

micstatic wrote:
the less 737's of any kind the better. That's my vote


seconded.
 
asr0dzjq
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Re: Rumor: DL looking to trade 717s for 737 Max

Wed Apr 22, 2020 3:56 pm

kimimm19 wrote:
micstatic wrote:
the less 737's of any kind the better. That's my vote


seconded.

Negative.
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AirwayBill
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Re: Rumor: DL looking to trade 717s for 737 Max

Wed Apr 22, 2020 3:58 pm

william wrote:

And people are stuck at home worrying about this pandemic and their livelyhoods. When things start to return the normal people will not know or care what a MAX is. People are worrying about more pressing matters now.


All true, until the media frenzy kicks in again to cover the possible MAX RTS, which won’t happen before the corona crisis is over and the general public is back to its old habits. When it happens, get the popcorn ready... :spin:

Corona pandemic isn’t the magical cure to the MAX abysmal reputation, the worst ever gained by a commercial airliner: the game has been basically put on pause, no more, no less.
 
Arion640
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Re: Rumor: DL looking to trade 717s for 737 Max

Wed Apr 22, 2020 4:05 pm

Good way to help support the boeing share price.
 
strfyr51
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Re: DL looking to trade 717s for 100 737 Max

Wed Apr 22, 2020 4:08 pm

Web500sjc wrote:
KFTG wrote:
So they want to trade 91 10-20 year-old aircraft for 100 brand new ones?
If true, another example of Delta's arrogance.


First off, I highly doubt DL is trying to make that exact trade, I think they are just trying to use the 717s they have as equity in a potential purchase. Now that we’re past that...

The bigger news is that A) DL is looking to place new aircraft orders, and B) Boeing might be able to sell 737Max to a large blue chip A320NEO customer. Boeing has had a rash of cancelations, and the 737M needs new sales and a new customer in order to reinvigorate the industrial confidence in that frame.

DL on the other hand has been talking about downsizing and manically cutting costs. Placing a new order for aircraft means the C suite is confident in revenue returning and a turnaround coming.

If they are exploring this, it is good news for DL and Boeing .

Boeing has a rash of cancellations for sure. But I think there might be airlines in the USA and around the world that are going to grow FAT when this COVID19 thing subsides. They'll be down for a while. And Delta is a shark in a sea lion population center.
 
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DL747400
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Re: Rumor: DL looking to trade 717s for 737 Max

Wed Apr 22, 2020 4:08 pm

FrenchPotatoEye wrote:
IAD787 wrote:
No guarantee the deal materializes as


Admission that this is BS story is nothing more than the clickbaits.

Thread reported. #fakenews


:checkmark: :checkmark: :checkmark:

Agree 100%. And people wonder why nobody is lining up to pay hundreds of dollars a year for that subscription site.

Nothing to see there.......... move along.
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RalXWB
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Re: Rumor: DL looking to trade 717s for 737 Max

Wed Apr 22, 2020 4:09 pm

UWPAviation wrote:
If Delta does order the MAX, which I think we all believe is inevitable, the US flyer who is petrified of this plane wont have much choices. DL, AA, UA, WN, AS all flying this plane.


We all do NOT believe that it is inevitable that DL orders 737s. Perhaps they just pull an UA move and stay with (more or less) one vendor.
 
atlflyer
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Re: Rumor: DL looking to trade 717s for 737 Max

Wed Apr 22, 2020 4:13 pm

Nicknuzzii wrote:
DL has cut their fleet to about 650 aircraft, about 20% smaller.


Delta has PARKED 650 planes not cut their fleet to 650 aircraft.

Per this morning’s earnings release for Q1 2020:

Expense Management

The company expects June quarter total expenses to decline by approximately 50%, or $5 billion, over prior year due to reduced capacity, lower fuel and cost initiatives, including:

Parking more than 650 aircraft
Consolidating airport facilities, with temporary concourse and Delta Sky Club closures
Instituting a company-wide hiring freeze and offering voluntary leave options with 37,000 employees taking short-term unpaid leave
Reducing salary expense through pay reductions for executive management and reduced work schedules across organization
 
PITexpress
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Re: Rumor: DL looking to trade 717s for 737 Max

Wed Apr 22, 2020 4:22 pm

Apologies if this is obvious or if it has already been discussed, but any chance Boeing just negotiates a lower lease (at least temporarily with DL) for the 717's? I'm sure they want to push their MAX's and get them into DL's fleet, but seems like a lower lease price would make this more palatable for DL in the near term.
 
strfyr51
Posts: 4981
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Re: Rumor: DL looking to trade 717s for 737 Max

Wed Apr 22, 2020 4:25 pm

william wrote:
MIflyer12 wrote:
UWPAviation wrote:
If Delta does order the MAX, which I think we all believe is inevitable, the US flyer who is petrified of this plane wont have much choices. DL, AA, UA, WN, AS all flying this plane.


Really, you want to go there?

People got back on DC-10s after AA's maintenance failures killed 273 people on AA 191 in 1979.

People got back on MD-8Xs after Alaska's maintenance failures killed 88 people on AS 261 in 2000.

People got back on Bombardier Q400s after repeated landing gear collapses.

People got back on A330s after AF 447 killed 228 passengers and crew.

People got back on DC-10s operated by U.S. carriers for more than a decade after UA 232 in Sioux City.

The guys who argue that MAX crashes will make material numbers of passengers avoid the type are ignorant of flight incident histories or willfully misrepresent them.


And people are stuck at home worrying about this pandemic and their livelyhoods. When things start to return the normal people will not know or care what a MAX is. People are worrying about more pressing matters now.

And to add with that? nO 737 max airplanes in the USA or in Europe had a problem. 2 African carriers had the crashes. And neither one had an Angle of attack indication, They couldn't ever have seen the AOA was even broken. Most of the other Max operators? Already flew the 737 which already had the AOA indication so they knew what they were looking at if the Capt's side indication went "sideways" and they got Pitch faults, They could just bypass the MCAS by disabling auto stab trim and doing it manually. BUT? You gotta know what you're looking at first and they didn't know. Boeing should never Sell another airplane without the AOA as a primary indication.
 
JoseSalazar
Posts: 225
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Re: Rumor: DL looking to trade 717s for 737 Max

Wed Apr 22, 2020 4:35 pm

1337Delta764 wrote:
IMO the feds need to put a No-Airbus clause in their bailout rules. That will help the U.S. economy better.

Cant tell if this is a serious post or a joke. But I think the tariffs already take care of that. And what about mobile produced airbuses?
 
JibberJim
Posts: 152
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Re: Rumor: DL looking to trade 717s for 737 Max

Wed Apr 22, 2020 5:00 pm

Why would Delta have agreed long term 717 leases anyway? There wouldn't have been any other airlines wanting the 717 that Boeing could have placed them with instead, why would they have committed to them to any more than a short time ahead - or were they all originally owned by delta and it was a sale and leaseback deal? What would Delta have got out of committing to a many year lease that they would not have got out of a lease with sensible break clauses, were they really so desperate for the planes that they'd commit so far ahead for such obsolete planes?
 
B737Captain1980
Posts: 41
Joined: Tue Jun 21, 2016 11:14 pm

Re: DL looking to trade 717s for 100 737 Max

Wed Apr 22, 2020 5:03 pm

Web500sjc wrote:
KFTG wrote:
So they want to trade 91 10-20 year-old aircraft for 100 brand new ones?
If true, another example of Delta's arrogance.


First off, I highly doubt DL is trying to make that exact trade, I think they are just trying to use the 717s they have as equity in a potential purchase. Now that we’re past that...

The bigger news is that A) DL is looking to place new aircraft orders, and B) Boeing might be able to sell 737Max to a large blue chip A320NEO customer. Boeing has had a rash of cancelations, and the 737M needs new sales and a new customer in order to reinvigorate the industrial confidence in that frame.

DL on the other hand has been talking about downsizing and manically cutting costs. Placing a new order for aircraft means the C suite is confident in revenue returning and a turnaround coming.

If they are exploring this, it is good news for DL and Boeing .


Wow, someone that is actually thinking rationally with intelligence instead of the usual non sense. Nice post!
 
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par13del
Posts: 10335
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Re: Rumor: DL looking to trade 717s for 737 Max

Wed Apr 22, 2020 5:40 pm

Hopefully someone remembers that Boeing has 400+ MAX a/c sitting around and a number of them will have been cancelled, so will it really be in Boeing's best interest to take a DL order for 100 a/c to be delivered in 5 years time over a 5 year span when they can fill that complete order in 6 months?

It may be easier for Boeing to simply renegotiate the lease rates versus book an order which DL will ultimately defer, defer then cancel. In my opinion this to DL is more of a paper transaction.
 
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N776AU
Posts: 1007
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Re: Rumor: DL looking to trade 717s for 737 Max

Wed Apr 22, 2020 5:45 pm

I was really hoping flying Delta would become much easier since I soon wouldn’t have to avoid the MD-88. Don’t tell me I will have another aircraft to stay away from. I’ve always been very passionate about being alive.
Careful, doors are closing, and will not reopen. Please wait for the next train.
 
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Polot
Posts: 10630
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Re: Rumor: DL looking to trade 717s for 737 Max

Wed Apr 22, 2020 5:54 pm

JibberJim wrote:
Why would Delta have agreed long term 717 leases anyway? There wouldn't have been any other airlines wanting the 717 that Boeing could have placed them with instead, why would they have committed to them to any more than a short time ahead - or were they all originally owned by delta and it was a sale and leaseback deal? What would Delta have got out of committing to a many year lease that they would not have got out of a lease with sensible break clauses, were they really so desperate for the planes that they'd commit so far ahead for such obsolete planes?

Stable long term leasing gets you better pricing. Especially important for making the economics of a 100 seat jet in mainline operations work. Having a lot of easy outs makes your lease more flexible but you end up paying for that flexibility. Delta has a history of using planes until the end of their useful life and has an in house maintenance program able to help support, why wouldn’t they do a long term lease? The industry, including DL, did not envisioned anything like covid-19 happening. If they did there are a lot of things they would have changed.
 
JohanTally
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Re: Rumor: DL looking to trade 717s for 737 Max

Wed Apr 22, 2020 5:57 pm

par13del wrote:
Hopefully someone remembers that Boeing has 400+ MAX a/c sitting around and a number of them will have been cancelled, so will it really be in Boeing's best interest to take a DL order for 100 a/c to be delivered in 5 years time over a 5 year span when they can fill that complete order in 6 months?

It may be easier for Boeing to simply renegotiate the lease rates versus book an order which DL will ultimately defer, defer then cancel. In my opinion this to DL is more of a paper transaction.


I do believe that just about every one of those new MAX aircraft that are stored still have a customer on the hook. Most of the cancellations I have seen are for future to be built aircraft. A lot can change obviously with the uncertainty of the MAX certification and Covid-19 but for now the vast majority of assembled aircraft have a home.
 
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Polot
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Re: Rumor: DL looking to trade 717s for 737 Max

Wed Apr 22, 2020 5:58 pm

JohanTally wrote:
par13del wrote:
Hopefully someone remembers that Boeing has 400+ MAX a/c sitting around and a number of them will have been cancelled, so will it really be in Boeing's best interest to take a DL order for 100 a/c to be delivered in 5 years time over a 5 year span when they can fill that complete order in 6 months?

It may be easier for Boeing to simply renegotiate the lease rates versus book an order which DL will ultimately defer, defer then cancel. In my opinion this to DL is more of a paper transaction.


I do believe that just about every one of those new MAX aircraft that are stored still have a customer on the hook. Most of the cancellations I have seen are for future to be built aircraft. A lot can change obviously with the uncertainty of the MAX certification and Covid-19 but for now the vast majority of assembled aircraft have a home.

There are now orphaned aircraft built but not delivered for the likes of Jet Airways, Air Italy, and I’m sure a few more.

That said even this comes to fruition I doubt all 100 would come from current feedstock, as things recover there will be other airlines looking to deal as well.
 
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precure787
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Re: Rumor: DL looking to trade 717s for 737 Max

Wed Apr 22, 2020 6:13 pm

This could be DL's plan to phase out ALL the McDonnell Douglas aircraft (MD-88, MD-90, and MD-95/717), as the MD's are rapidly aging relative to their Airbus and Boeing fleets.
Edward Zen/Precure 787
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