As Boeing Weighs New `797,' Delta Wants to Fly the Jet First

(Bloomberg) -- Delta Air Lines Inc. is showing no hard feelings after its recent trade spat with Boeing Co.

The No. 2 U.S. carrier wants to be one of the first to fly a potential new mid-sized jetliner from Boeing, said Delta Chief Executive Officer Ed Bastian. That’s a vote of confidence from one of the most influential aircraft buyers as Boeing decides whether to build the plane, dubbed the 797 by analysts.

As Boeing Weighs New `797,' Delta Wants to Fly the Jet First

“You’re going to see us participate in Boeing’s middle-of-the-market campaign,” Bastian said. “I hope that we’re going to be a launch customer on that program as well.”

The employee message shows how Delta is looking to play an active role in the development of Boeing’s first all-new jetliner since the 787 Dreamliner. The Atlanta-based carrier recently tangled with the planemaker in an international trade case involving Bombardier Inc. planes and placed a $12.7 billion order last month for Airbus SE’s A321neo -- one of the toughest aircraft competitors to Boeing’s next new plane.

The airline calls Boeing’s proposed jet “an interesting concept,” said spokesman Morgan Durrant. The plane would be a potential replacement for Delta’s aging fleet of Boeing 757s and 767s on long domestic routes and midrange international flights. 

‘Actively Engaged’

“Delta is actively engaged with Boeing on this and we will continue a healthy dialog with them as the program matures,” Durrant said.

A Boeing representative said the company doesn’t disclose details of customer discussions.

The cost of developing what Boeing calls the “New Midmarket Airplane” probably would run from $10 billion to $15 billion, Richard Aboulafia, an aerospace analyst at Teal Group, said recently.

Boeing has been in talks with more than 50 potential customers as it refines its design for the NMA and executives build a business case for the planemaker’s board. 

Market Gap

The company is targeting the market gap between the largest narrow-body and smallest wide-body aircraft. One would seat 225 travelers and fly about 5,000 nautical miles -- from the midwestern U.S. to Europe, for example. A larger sibling would seat 275 and cruise about 4,500 nautical miles.

Bastian’s employee message should relieve concerns that Delta’s dispute with Boeing in an international trade case will push the carrier into Airbus’s camp for the long term. 

Boeing last year persuaded the U.S. Commerce Department to slap duties of almost 300 percent on a new jet from Bombardier, called the C Series. The Canadian planemaker sold 75 of the new planes to Delta at well below cost, Boeing alleged. The U.S. International Trade Commission ruled last month that the sale of the C Series isn’t harming American industry and blocked the duties from being imposed.

Airbus Preference

While Bastian has said the trade case wouldn’t affect Delta’s fleet orders, its decision in December to order 100 Airbus A321neo jets over Boeing’s competing 737 Max 10 fueled industry speculation about whether Delta might shun Boeing for some period. The new Airbus jets will replace at least some of Delta’s older 757s, as well as McDonnell Douglas MD-90 and older A320 aircraft.

Boeing’s new 797 would give Delta better range than the A321neo and additional capacity to haul cargo, which is more important for international flights than for domestic ones, said George Hamlin of Hamlin Transportation Consulting in Fairfax, Virginia.

“Delta needs both Boeing and Airbus,” Hamlin said. “If it becomes beholden to one, that doesn’t give it much leverage in negotiations.”

©2018 Bloomberg L.P.

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