McDonnell Douglas, Boeing Split Big Delta Aircraft Deal

Delta Air Lines Inc. said Thursday that it has ordered or taken options on 215 new aircraft, dividing the order between McDonnell Douglas Corp. and Boeing Co. in deals that could total $10 billion.

The massive order, which had been hotly contested by the major aircraft and engine manufacturers, is to replace aging parts of Delta’s fleet. Delta, with about 380 planes, is the nation’s fourth-largest airline in terms of passenger-miles flown.

Delta placed firm orders for nine MD-11 aircraft manufactured by St. Louis-based McDonnell Douglas and nine Boeing 767-300R planes. It said the order, including spare parts and engines, is worth $1.75 billion.

In addition, Delta took out options on another 31 MD-11s and 16 other Boeing 767 jets, as well as options on 100 MD-88s manufactured by McDonnell Douglas and 50 Boeing 757-232s.

Industry experts put the value of the McDonnell Douglas contract at more than $6 billion, if all the options are exercised. But the company would not confirm or deny the figure.

The Boeing orders would be worth an estimated $4 billion, but a company official stressed that the figure was only speculation since Delta may not exercise all its options.

Delta also said Pratt & Whitney had won orders to provide engines for both sets of planes, beating out competition from General Electric Co. and Rolls-Royce PLC.

“The competition among the airplane and engine manufacturers was keen,” Delta said.

Industry analysts had expected Delta to purchase either the MD-11 or Boeing 747 as a new long-distance wide-body aircraft. The 767 is a smaller long-range aircraft.

The order gives a big boost to McDonnell Douglas, which has been fighting to keep pace with Boeing and the European consortium Airbus Industrie.

Highlights Growth Plans

Seattle-based Boeing, the world leader in commercial aviation with an estimated 50% of the market, has already garnered a record number of orders for planes this year.

Boeing’s biggest order was a $4.6-billion purchase of 100 planes by International Lease Finance Corp., a Beverly Hills-based airline leasing company, in May.

“These new orders and options announced today highlight our international and domestic growth plans and commitment to maintaining the most modern fleet of aircraft available,” Delta said in announcing the orders.

Delta said the orders and options are in addition to 42 Boeing 757-200s, 12 Boeing 767-300s and 85 McDonnell Douglas MD-88s remaining from previously announced orders and options.

Delta could easily afford a major purchase of jetliners because it is in strong financial shape, airline analysts said.

Delta had $997 million of long-term debt and capitalized lease obligations and $2.1 billion of shareholders equity at the end of its fiscal year on June 30. It also had $441 million in cash.

The first of the MD-11s will be delivered in spring 1991. The first of the 767s will arrive in 1990.

Delta operates McDonnell Douglas MD-82 and MD-88 twin jets and Boeing 737, 757 and 767 twin jets and 727 tri-jets.

Delta’s total fleet was 384 aircraft at the end of July.

The MD-11 is an updated version of the widely used DC-10. It is a long-range aircraft slightly smaller than the jumbo Boeing 747.