Delta Defers $1 Billion in New Aircraft

Delta Air Lines said Monday that it will defer as much as $1 billion in new aircraft orders to help restore profitability, the latest in a series of tough knocks for major aircraft manufacturers.

The Atlanta-based carrier did not identify which aircraft producers will be affected, but McDonnell Douglas and Boeing together hold 241 orders from Delta, while Airbus Industrie holds nine.

The $1-billion deferral could affect fewer than 20 planes, depending on the combination of jumbo jetliners and narrow-body aircraft delayed, according to an industry source. That means that Boeing or McDonnell Douglas likely will take the biggest part of the hit, even if all of the Airbus orders are delayed.

The deferred orders affect planes scheduled for delivery during 1993 and 1994. Delta did not say how long it would seek to delay the deliveries.

Delta has not yet notified the manufacturers which planes will be affected, according to Delta spokesman William Berry. The 250 aircraft on order are worth about $15 billion. Delta also has options for 250 additional jets.

The Delta announcement is the latest in a series of setbacks for the aircraft industry, which is suffering through a difficult year. McDonnell has had the leanest year and could be the hardest hit if it takes a preponderance of the delays.

Analysts, though, said they expect the effects to be spread out.

“It has to be a little bit of everybody,” said Howard Rubel, aerospace analyst at C. J. Lawrence, Morgan Grenfell. “Manufacturers continue to be blindsided by the airlines. That is one reason why the business is risky. A firm order doesn’t mean what it used to.”

In a related move, Delta’s president and eight senior vice presidents agreed to an average 5% pay reduction effective Sept. 1, the company said. Last week, Delta Chairman Ronald Allen’s base salary was reduced $100,000 to $475,000.

Earlier this year, Delta reduced by $5 billion its capital spending plans involving aircraft purchases through the year 2001. Delta last month reported a loss of $180 million for the quarter ended June 30, contrasted with a $19-million profit the previous year.