$10-Billion Jetliner Order : Delta OKs Douglas and Boeing Bids
Delta Air Lines Inc. said today it will spend as much as $10 billion on McDonnell Douglas Corp. jetliners and Boeing Co. aircraft in one of the biggest orders on record.
Delta said it plans to buy up to 160 MD-90 jetliners from McDonnell Douglas Corp. and up to 100 Boeing 737 aircraft. Both planes are narrow-body, medium-range aircraft.
Delta had previously announced orders and options for another 259 airplanes representing an investment of $13 billion.
Chairman Ronald Allen said the agreement with McDonnell Douglas covers 50 firm orders with 110 planes on option while the Boeing order consists of 50 firm deliveries and 50 planes on option.
The order is one of the biggest on record and the company said in a statement that it “will help to shape the company’s future through the next decade.”
Delivery is scheduled from now to 2001.
Delta’s present fleet of more than 400 aircraft is the youngest of the major U.S. airlines, with an average age of 8.4 years.
Allen said the new orders should maintain or bring down that average. He added that Delta plans to phase out about half its current fleet by the turn of the century, bringing the entire fleet up to Stage 3 federal noise standards.
“These orders and options for new aircraft highlight our plans for international and domestic growth, and reconfirm our policy of operating the most modern fleet of aircraft available,” Allen said.
Delta is the first major U.S. airline to place a large order for the new McDonnell Douglas MD-90s.
Allen said the company expects to finance the new planes from its own cash without altering much of its current debt structure. Available seats per mile should increase by 5% to 7% a year in coming years, he said.
Shares in Boeing Co., the world’s largest aircraft maker, were down 62.5 cents at $55.25 mid-afternoon, while McDonnell Douglas rose 62.5 cents to $69.75.
The news will be welcome for Seattle-based Boeing, beset by bad news recently.
On Monday, the company pleaded guilty to two criminal charges of illegally using internal sensitive Pentagon documents.
Ten days ago negotiations between Boeing and its machinists, aimed at ending a monthlong strike, broke off after the union rejected a company offer.
The strike is expected to soon have a serious impact on Boeing’s ability to deliver planes. The company was facing a record order book when the strike hit.
Douglas, virtually moribund six years ago, has reported booming orders recently.
The third big international aircraft builder, the European Airbus consortium, received none of the big order.
The order was one of the biggest ever announced. The biggest U.S. plane order was an April deal by United Airlines to spend up to $15.74 billion for planes from Boeing.
