Delta’s CEO Expects Boeing Will Go Ahead and Build the ‘797’
(Bloomberg) -- Delta Air Lines Inc. is still holding out hope that Boeing Co. will move ahead with a new midrange jetliner whose fate remains in limbo while the planemaker focuses on the crisis engulfing its grounded 737 Max.
The carrier’s chief executive officer dangled a possible reward to Boeing for proceeding with an aircraft that would be tailored for flights of about 5,000 nautical miles: potentially hundreds of jet sales. The proposed two-model family is known within Boeing as the NMA, for new midmarket airplane, while some analysts have dubbed it the 797.
“I do anticipate they will do it. I hope they will do it,” Delta CEO Ed Bastian said in an interview Wednesday at Bloomberg headquarters in New York. “We have a significant need between the retirements of the 757 and 767 fleets. That’s almost 200 aircraft over the next decade.”
The decision of whether to build the proposed jet has been on hold as Boeing struggles to get the 737 Max back in the air amid a global grounding that began in March after two deadly crashes. The manufacturer has diverted engineers and the NMA’s program manager to the 737 program, the company’s largest source of profit, and reiterated that it won’t make any decisions on the midsize jets until the Max is flying again.
Airbus SE has made the most of the distraction, nabbing sales with a longer-range version of its A321neo known as the XLR, which is designed to cruise across the Atlantic Ocean with range comparable to Boeing’s out-of-production 757. American Airlines Group Inc. ordered 50 of the XLR jets in June to replace its aging 757s. JetBlue Airways Corp. is buying Airbus’s new offering to begin flying to Europe in 2021.
Delta would seem to be another prospective customer of the Airbus model. The Atlanta-based airline, whose fleet decisions are closely followed within the industry, already has more than 200 Airbus planes in its fleet. Its order for the Airbus A220 helped win over other North American customers.
“Obviously Airbus is at the table and they are offering us product today, but we want to wait and see what Boeing can create,” Bastian said. “We’ll need to make some decisions relative to the Airbus fleet sooner, but we’re not going to make a big decision until we know for sure what Boeing is going to do.”
The A220-100, Delta’s newest plane, has been having some operational problems since starting flights in February, Bastian said. The airline completes more than 95% of A220 flights, he said, a measure of how often its avoids cancellations. But Delta, which prides itself on reliability, wants to get that number to 99%.
“It doesn’t quite yet, nor did we expect it to, have the same level of reliability” as similar aircraft in Delta’s fleet at this point, Bastian said. “We have a lot to learn and we put them in some of our most highly stressed markets in the Northeast.”
The carrier is flying 20 of the narrow-body aircraft and has ordered 70 more, including the larger A220-300. It’s the first U.S. airline to fly the plane, which was developed by Bombardier Inc. before Airbus acquired control of the program.
Delta is working with Airbus and engine maker Pratt & Whitney, a unit of United Technologies Corp., to resolve the issues that Bastian said are “all solvable, all relatively short term.”
As for the NMA, there have been rumblings among analysts that Boeing might eventually shelve the proposed plane, which targets a narrow market sliver between the largest single-aisle and smallest wide-body aircraft. Some think the Chicago-based manufacturer should instead focus on a new single-aisle family that would range in size from the 737 Max 8 to the 757.
Boeing still has a team of engineers “making good progress on risk reduction and the business case” for the NMA, CEO Dennis Muilenburg said last week. While the company isn’t going to rush to a decision, “we’re also going to continue investing in innovation. NMA is helping us create the production system of the future and that’s going to be valuable for the long run.”
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