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coronado
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Delta Defers Delivery Of 4 A350 By 1 To 2 Years

Mon May 16, 2016 6:31 pm

http://www.sec.gov/Archives/edgar/da...01968716006265/delta_8k-ex9901.htm


Page 12 states they are deferring delivery of 4 A350s from 2018 to 2019/2020. They must be seeing rather tepid demand going forward, plus current fuel prices probably justify slowing down 767 retirement plans.



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Prost
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RE: Delta Defers Delivery Of 4 A350 By 1 To 2 Years

Mon May 16, 2016 6:40 pm

The article states they're trying to reduce capacity to raise PRASM. Whether that's the whole story, I don't know.
 
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NWAROOSTER
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RE: Delta Defers Delivery Of 4 A350 By 1 To 2 Years

Mon May 16, 2016 8:57 pm

Looks like Delta will have retired all their MD-88s within the next five years along with their 747s.
Wonder what else will go?   
Procrastination Is The Theft Of Time.......
 
boeing767-300
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RE: Delta Defers Delivery Of 4 A350 By 1 To 2 Years

Tue May 17, 2016 3:21 am

This is nothing more than a commercial arrangement that suits both Delta and Airbus. Delta wants to delay a few deliveries and at the same time someone else wants there A350s ASAP then it is win win for both.
With around 16 deliveries in the first 16 months Airbus would agree to the delay real quick.
 
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DocLightning
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RE: Delta Defers Delivery Of 4 A350 By 1 To 2 Years

Tue May 17, 2016 4:54 am

The A350 is a 744 replacement. Are they going to keep their 744s longer?
-Doc Lightning-

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XT6Wagon
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RE: Delta Defers Delivery Of 4 A350 By 1 To 2 Years

Tue May 17, 2016 4:58 am

Quoting boeing767-300 (Reply 3):
This is nothing more than a commercial arrangement that suits both Delta and Airbus. Delta wants to delay a few deliveries and at the same time someone else wants there A350s ASAP then it is win win for both.
With around 16 deliveries in the first 16 months Airbus would agree to the delay real quick.

Delta's obsession with leaving fleet renewal to the last second is going to eventually bite it in the rear end. Doesn't matter which plane maker, or size class...
 
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CARST
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RE: Delta Defers Delivery Of 4 A350 By 1 To 2 Years

Tue May 17, 2016 6:37 am

Quoting XT6Wagon (Reply 5):
Delta's obsession with leaving fleet renewal to the last second is going to eventually bite it in the rear end. Doesn't matter which plane maker, or size class...

Never was a problem with the old DC-9s... why should it be a problem for the 747 or 767 fleet? It is just a matter of how good you take care of the old birds.

That is part of their strategy for the last 20 years now, keep airplanes flying as long as possible. They may have higher maintenance costs, but their overall costs are down, as these airplanes are paid for or have low lease rates.

Other airlines may retire their planes after 10 years (EK, SQ), they will have very low maintenance costs, but very high costs from their lease or depreciation rates. Makes quite a difference if I depreciate my 200 million dollar aircraft over 10 or over 15 or 20 years (this depends of course if the law allows such a flexible depreciation).
 
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LAX772LR
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RE: Delta Defers Delivery Of 4 A350 By 1 To 2 Years

Tue May 17, 2016 7:30 am

Quoting XT6Wagon (Reply 5):
Delta's obsession with leaving fleet renewal to the last second is going to eventually bite it in the rear end.

Based on what:
  • their (and NW's) successful history of doing that for decades on end, with no negative repercussions?
  • or maybe you were thinking of their stellar mtx and safety record?

    .....all while ignoring the 200+ new narrowbodies and 70+ new widebodies all due within the next half-decade, of course.


    Quoting XT6Wagon (Reply 5):
    Doesn't matter which plane maker, or size class

    Hogwash.

    They fly the aircraft well within the time they're built/certified to operate for, thus getting their expenditure's worth without parting with unnecessary CapEx for acquisition.

    When other airlines have DL's balance sheet + pax carried + safety record, then perhaps DL will start imitating those carriers, at the advice of armchair CEOs.

    Until then, what they're doing not only works, but actually works BETTER from a financial perspective than just about any other Global carrier on the planet.


  • [Edited 2016-05-17 00:34:50]
    I myself, suspect a more prosaic motive... ~Thranduil
     
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    Spiderguy252
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    RE: Delta Defers Delivery Of 4 A350 By 1 To 2 Years

    Tue May 17, 2016 7:39 am

    Quoting boeing767-300 (Reply 3):
    This is nothing more than a commercial arrangement that suits both Delta and Airbus. Delta wants to delay a few deliveries and at the same time someone else wants there A350s ASAP then it is win win for both.

    Such as? Every other week there's news of another carrier that isn't too keen on taking delivery of their A350s. TG and UL are a couple of other airlines that come to mind.
    Vahroone
     
    hkcanadaexpat
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    RE: Delta Defers Delivery Of 4 A350 By 1 To 2 Years

    Tue May 17, 2016 8:51 am

    Quoting DocLightning (Reply 4):
    The A350 is a 744 replacement. Are they going to keep their 744s longer?

    Unlikely. There are 25x A359s replacing 9x 744s so moving 4 A349s out two years doesn't change much to the equation. The new delivery schedule of the A359 is 2017 (6), 2018 (5), 2019 (10), 2020 (4) - although i presume the 2019-20 figures have room for adjustment. So 11x A359s in 2017-18 is more than enough to see the 744s go.
    A
     
    osteogenesis
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    RE: Delta Defers Delivery Of 4 A350 By 1 To 2 Years

    Tue May 17, 2016 9:05 am

    Quoting hkcanadaexpat (Reply 9):
    Every other week there's news of another carrier that isn't too keen on taking delivery of their A350s

    You base this on Delta deferring delivery of 4 of a total of 25 ordered A350? Have you ever considered the repercussion of low oil price in fleet renewal?
     
    PPVRA
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    RE: Delta Defers Delivery Of 4 A350 By 1 To 2 Years

    Tue May 17, 2016 12:48 pm

    Quoting CARST (Reply 6):
    Other airlines may retire their planes after 10 years (EK, SQ), they will have very low maintenance costs, but very high costs from their lease or depreciation rates. Makes quite a difference if I depreciate my 200 million dollar aircraft over 10 or over 15 or 20 years (this depends of course if the law allows such a flexible depreciation).

    Depreciation is based on expected useful life. You wouldn't depreciate the entire value of an aircraft over 10 years even if you plan on keeping it only for 10 years. Unless you plan on flying it so hard for 10 years the thing will be "finished" by then.

    But, useful life is still an estimate. Eventually you run out of depreciation (or have very low depreciation) and if the asset is well maintained, it's still going to be around and useful.
    "If goods do not cross borders, soldiers will" - Frederic Bastiat
     
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    Spiderguy252
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    RE: Delta Defers Delivery Of 4 A350 By 1 To 2 Years

    Tue May 17, 2016 1:13 pm

    Quoting osteogenesis (Reply 10):
    You base this on Delta deferring delivery of 4 of a total of 25 ordered A350? Have you ever considered the repercussion of low oil price in fleet renewal?

    No, I listed out two more carriers who are going through the same dilemma: Thai and Srilankan Airlines.
    Vahroone
     
    ec99
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    RE: Delta Defers Delivery Of 4 A350 By 1 To 2 Years

    Tue May 17, 2016 2:06 pm

    Quoting LAX772LR (Reply 7):
    When other airlines have DL's balance sheet + pax carried + safety record, then perhaps DL will start imitating those carriers, at the advice of armchair CEOs.

       Delta is the most valuable airline in the world and one of the most profitable. I would certainly be hesitant to criticize decisions coming out of Delta HQ. Delta's operational success combined with financial success has been incredible since they came out of bankruptcy.

    This coming from someone who doesn't fly Delta much due to their poor FF program.

    Quoting boeing767-300 (Reply 3):
    This is nothing more than a commercial arrangement that suits both Delta and Airbus. Delta wants to delay a few deliveries and at the same time someone else wants there A350s ASAP then it is win win for both.
    With around 16 deliveries in the first 16 months Airbus would agree to the delay real quick.

       - One could argue otherwise but this seems correct to me. AB has plenty of customers who want to get their hands on an A350 ASAP so the delay is probably beneficial for them. Whereas with cheap gas looking likely to continue for a few more years, Delta figures on a limited number of routes, for a couple more years, they can make more money flying a paid off 747 or 767 versus a new A350.
     
    MIflyer12
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    RE: Delta Defers Delivery Of 4 A350 By 1 To 2 Years

    Tue May 17, 2016 2:19 pm

    AA cut A350 deliveries for 2017 to four from six. It is dumping nine 333s. It is accelerating a plan to retire 767-300s in spite of lowish fuel prices. DL pushing out four A350s is just a little fiddling at the edge. On its own it isn't big enough of an action to be compelling evidence for a change of strategy.
     
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    NWAROOSTER
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    RE: Delta Defers Delivery Of 4 A350 By 1 To 2 Years

    Tue May 17, 2016 2:26 pm

    Quoting ec99 (Reply 13):
      - One could argue otherwise but this seems correct to me. AB has plenty of customers who want to get their hands on an A350 ASAP so the delay is probably beneficial for them. Whereas with cheap gas looking likely to continue for a few more years, Delta figures on a limited number of routes, for a couple more years, they can make more money flying a paid off 747 or 767 versus a new A350.

    Delta and the other operators of the 747-400 flying these aircraft in the United States must complete a "MUST DO AD" by sometime in 2018. It is the nitrogen fuel tank inerting of the center tank. If they do not, the aircraft can no longer be flown. That is one reason Delta will retire their 747s.
    Delta may be willing to delay a couple A350s to accommodate another carrier, but also I think airline industry is peaking and Delta knows that. However they realize their are some aircraft in their fleet that need to be retired such as the MD-88 s and a few others that are getting a little long in the tooth.   
    Procrastination Is The Theft Of Time.......
     
    bkflyguy
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    RE: Delta Defers Delivery Of 4 A350 By 1 To 2 Years

    Tue May 17, 2016 2:38 pm

    I think this has more to do with the softness in International yields due to a strong dollar along with the the drop in Brazil traffic. Better to let the market stabilize some.
     
    LPSHobby
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    RE: Delta Defers Delivery Of 4 A350 By 1 To 2 Years

    Tue May 17, 2016 2:52 pm

    Quoting bkflyguy (Reply 16):
    I think this has more to do with the softness in International yields due to a strong dollar along with the the drop in Brazil traffic. Better to let the market stabilize some.

    Do you think that the crisis in Brazil is affecting US airlines that much?
     
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    litz
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    RE: Delta Defers Delivery Of 4 A350 By 1 To 2 Years

    Tue May 17, 2016 3:24 pm

    I don't think it's the Brazil traffic as much as it is just worldwide traffic in general.

    Travel to/from Europe (in particular) is down over terrorism fears, and economics in general.

    Central and South America (and Brazil in particular, Olympics or not) you have Zika.

    Not a fun time to be a US airline flying to places outside the US.
     
    MSPNWA
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    RE: Delta Defers Delivery Of 4 A350 By 1 To 2 Years

    Tue May 17, 2016 3:37 pm

    Looks like the beehive was shaken. Bzzzz.

    Anyway, like AA just announced, DL is focused on capacity control to prop up yields. It's disappointing, and I don't agree with it in the long-run, but it's not surprising at all. I would expect the 2019 schedule to be changed too down the road. 10 deliveries seems pretty aggressive for DL.
     
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    TVNWZ
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    RE: Delta Defers Delivery Of 4 A350 By 1 To 2 Years

    Tue May 17, 2016 3:47 pm

    Bloomberg has a story a couple days ago suggesting a glut of capacity. This may be just planning fewer seats..

    http://www.bloomberg.com/news/articl...dustry-capacity-glut-weakens-fares
     
    Beatyair
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    RE: Delta Defers Delivery Of 4 A350 By 1 To 2 Years

    Tue May 17, 2016 4:39 pm

    No Biggy. Delta is reading the market and it is only 4 aircraft. Delta still needs and will retire its oldest 767's from the 80's and it's domestic 767 fleet. As well, the 747's need to go. Delta is still receiving its A333 heavy's, 21 A350, and 25 A330neo's.
     
    deltal1011man
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    RE: Delta Defers Delivery Of 4 A350 By 1 To 2 Years

    Tue May 17, 2016 6:16 pm

    Quoting XT6Wagon (Reply 5):

    Delta's obsession with leaving fleet renewal to the last second is going to eventually bite it in the rear end. Doesn't matter which plane maker, or size class...

    These aircraft aren't even for fleet renewal. They are growth aircraft after the first batch come in 2017. FWIW DL will still take 4 or 5 aircraft in 2018

    Quoting DocLightning (Reply 4):

    The A350 is a 744 replacement. Are they going to keep their 744s longer?

    No. These are 2018 deliveries
    DL is still planning on taking 7 A350s and 2 242t 333s in 2017 plus 4-5 more 359s in 2018. That is more than enough capacity to replace the 747s plus either some growth or some other upgrading.
     
    XT6Wagon
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    RE: Delta Defers Delivery Of 4 A350 By 1 To 2 Years

    Tue May 17, 2016 10:55 pm

    Quoting deltal1011man (Reply 23):
    These aircraft aren't even for fleet renewal. They are growth aircraft after the first batch come in 2017. FWIW DL will still take 4 or 5 aircraft in 2018

    New aircraft for expansion can quickly be used for fleet renewal if the growth turns out to be a bad idea by the time the planes arrive. The oldest planes can then leave for some quality rest and relaxation in the desert. Its why I really don't like seeing airlines going long periods without getting new frames. You don't have to operate all planes
     
    DeltaB717
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    RE: Delta Defers Delivery Of 4 A350 By 1 To 2 Years

    Tue May 17, 2016 11:32 pm

    Quoting deltal1011man (Reply 23):
    No. These are 2018 deliveries
    DL is still planning on taking 7 A350s and 2 242t 333s in 2017 plus 4-5 more 359s in 2018. That is more than enough capacity to replace the 747s plus either some growth or some other upgrading.

    Awesome, thanks for answering my question before I'd even asked it!!! :P

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