Ok I will try to be nicer this morning but I am going to present my final case:
DL reached an agreement with Airbus that resulted in the deferral and revised delivery schedule on ~200 narrowbody aircraft.
Aircraft Type Purchase Commitments
Our future aircraft purchase commitments totaled approximately $14.2 billion at September 30, 2020:
(in millions) Revised 9/2020 versus 12/2019 figure (pre-COVID)
2020 $ 380 vs 2,980
2021 1,310 vs 3,740
2022 2,460 vs 3,390
2023 2,310 vs 1,640
2024 2,960 vs 500
Thereafter 4,810 vs 1,440
Total $ 14,230 vs 13,690
These figures above illustrate just how much DL was deferred out over the next decade of its original purchase commitments from Airbus. DL and Airbus have not yet publically disclosured the details and revised delivery schedules yet, as the heavily redacted details from an agreement reached in July 2020 were attached to the 10-K filing.
Prior to COVID, DL's purchase commitments were essentially solidified out through 2023, with the need for additional orders needed beyond that timeframe. With the revised purchase commitments, they are essentially solidified out through at least 2025+. Unverified at this point, but deliveries in 2021 will mostly a smaller number of A220, A321CEO, and a couple of A339s. A321NEOs may be pushed out to 2022 or 2023.
DL and Airbus view each other as strategic partners, and relationships are often solidified during times of adversity. Both parties reached an agreement / settlement that is tough for both sides but obviously has some degree of compromise to accommodate the dire condition both parties are in at this time.
There is zero need for additional aircraft orders / purchase commitments for the next 5+ years by DL.
DL has made clear of its near-term fleet changes which on the narrowbody side has included:
47 MD88 - were to be gone by end of 2020 anyways
30 MD90 - were to be gone by end of 2022
10 B73G - small sub-fleet, high CASM, that were coming due for heavy maintenance
10 A320s - 10 from the older trance that were next-up for heavy maintenance checks in 2020
The fate of the 717 fleet was made official with them all to be retired by the end of 2025
26 B717s already removed from the fleet that aren't going to be reactivated
49 are currently in-service
Yes, the A319, A320, 738, and 757s will all be scheduled for retirement over the next decade.
Yes, there will be an opportunity for a potential MAX order at some point
However, that time is not now.
Not when DL is burning through $20M/day in cash
Not when they just increased their debt load by $16B (or something like that)
Not when they deferred over $10 B of aircraft purchase commitments.
For the routes that DL primarily use their A319, A320, 738s, there is minimal efficiency gain of the MAX. DL has a disproportionate number of <2 hour routes, if not <1 hour routes with mid-sized mainline aircraft from ATL, DTW, MSP, SLC. Its a lot more cost-effective in the near-term put them through their last and final HMVs that to invest in new aircraft with money that frankly doesn't exist at this time.
The most plausible window for the MAX at DL is 2026+, when they get through most of the existing Airbus purchase commitments, and likely go through an RFP process when they are looking at replacing the bulk of the 738 fleet, along with A319 & 757s
Last edited by PSU.DTW.SCE
on Mon Nov 23, 2020 3:16 pm, edited 1 time in total.