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Report: Delta considering trading 717s to Boeing for 737MAX jets

Report: Delta considering trading 717s to Boeing for 737MAX jets

Old Apr 22, 20, 11:50 am
  #46  
 
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Originally Posted by ryw View Post
My understanding is that for Delta, the A220 is basically a replacement for the B717s - if DL was planning to phase out the 717s anyways, to me it seems to make sense that if they can some type of deal as they phase them out, it'd be something they'd want to look into (though I'm no expert in the aviation business!).
This is about extinguishing Delta's lease obligations for the 717. They don't need the extra capacity and don't want to waste cash on lease payments for planes they don't need and so they are trying to get Boeing to agree to extinguish their lease payments as one of the incentives for a future 737MAX order. If the 717s were off the table, Delta would get a lower direct price for the MAX - this is about transferring a liability back to Boeing. That said, Boeing is not in a great cashflow position either so at best this is robbing Peter to pay Paul.

Leaving aside questions of safety and consumer confidence, might the MAX10 be a viable replacement for the (smaller) 757s, since the new midsize replacement project seems to be on hold?
The A321neo already serves as a 752 replacement in terms of capacity (and range if Delta converts any into LR/XLR variants). That said, Delta loves low-CASM planes for denser routes. Delta currently uses the 739 for this, and so this would be the natural evolution of that role - a slight upgauge of another 15-20 seats.

Also does DL have orders on aircraft that would replace the MD88s and 90s? Or would we expect them to shift some 737s and A320s onto those routes?
Even prior to COVID-19, Delta had more than enough aircraft on order to replace the MD88s and MD90s. These hypothetical planes - the earliest delivery of which would likely still probably not take place for at least 5 years - would likely go to replacing the capacity of the aging A320s, 738s, and 757s. Given that the 737-9/10MAX and A321neo are basically fungible, you could argue about which planes Delta is "truly" replacing. But that is the likely target replacement pool since the MD88 and MD90s will be long gone before the first one of these planes get delivered.
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Old Apr 22, 20, 12:18 pm
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The problem for DL is there is no plane for them to swap the 717s leases with other than the 737Max.

They're clearly committed to the A359 and A330 for long haul and they just refreshed the 777s so no need to top-up there. With demand dropping precipitously, any need for the 777X just disappeared and with Boeing's financial woes, you can put all talk of the NMA to bed for a while. I guess they could swap the 717s for some 787s but I'm sure their models show domestic travel coming back before international travel which makes a 737Max far more attractive than the 787 and again the overlap with the A359 and A339 is too high to be worth introducing a new fleet type.

That leaves DL with either holding onto the 717 leases or trying to make this wild deal. We also know that DL is shrewd at negotiating and bought the A220 when it was basically on its death bed.

The fact that Boeing is the lessor here makes this especially interesting because it effectively blocks Airbus from making a counter offer unless Airbus offers to cover the cost of the 717 leases
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Old Apr 22, 20, 12:54 pm
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Originally Posted by rylan View Post
Is the MAX going to actually be 'fixed' by then? I'm sure that Boeing is not in any hurry or staffing the software and testing program right now, and the FAA is not in any hurry to review anything.

Doesn't how much software you throw at the MAX... you can't fix inherent aerodynamic instability with magic code.
There is nothing unstable about the plane at all. The only problem is it flew a bit DIFFERENTLY than the NG, in a very few corner cases. They wanted to keep the flying characteristics the same as NG in all cases, so pilots wouldn't have to get a new type certificate. That's it. If they had gone the route of needing pilots to do a full training on it, they wouldn't have needed MCAS at all. In their pursuit to make it "feel" like the pilots were flying an NG, they screwed up the MCAS. The plane would be perfectly fine if they disabled mcas, but nobody would buy it because they'd have to get an entire roster of max only pilots.
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Old Apr 22, 20, 1:01 pm
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I thought DL leased their 717s from Southwest, who inherited them from AirTran takeover. When did this change?
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Old Apr 22, 20, 1:09 pm
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Originally Posted by flyerCO View Post
I thought DL leased their 717s from Southwest, who inherited them from AirTran takeover. When did this change?
AirTran was leasing (most of) them from Boeing. When Southwest wanted to get rid of the 717s, they needed to get rid of the lease. Delta bought out the lease. Delta then formally extended the lease with Boeing a couple of years ago.

I think there may be 10 or so that are outright owned (not 100% sure) but the majority are leased through Boeing.
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Old Apr 22, 20, 1:19 pm
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Originally Posted by ethernal View Post
AirTran was leasing (most of) them from Boeing. When Southwest wanted to get rid of the 717s, they needed to get rid of the lease. Delta bought out the lease. Delta then formally extended the lease with Boeing a couple of years ago.

I think there may be 10 or so that are outright owned (not 100% sure) but the majority are leased through Boeing.
I guess I misunderstood the deal. I thought Southwest was still technically the owner of the 717s. Learn something everyday even when stuck alone.
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Old Apr 22, 20, 2:10 pm
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Originally Posted by flyerCO View Post
I guess I misunderstood the deal. I thought Southwest was still technically the owner of the 717s. Learn something everyday even when stuck alone.
Some of the news stories from those days describe the transaction as a sublease. And Southwest spent around $100 million to redo the cabins for Delta.

I can see this making sense for Delta - get out from under lease payments for the 717s now, use the A220s and larger regional jets as replacements, and sign a deal for some new 737s to be delivered 2-3 years down the road. I wonder how many 717s are parked?

Or it's a ploy to get the lease rates reduced - there would be some demand for 717s, but not at this time and not the entire fleet. These have been on lease long enough that the residual value should be getting pretty low.
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Old Apr 22, 20, 2:13 pm
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Originally Posted by BenA View Post
The problem with this theory is that there are still other non-Delta users of the 717 worldwide, including Hawaiian - who will probably hold onto them until the wings fall off, since there isn't a great alternative out there for the kind of repeated intra-island flying that's their bread and butter.
If my memory serves me correctly all it took to knock the L1011 out of the skies was all outside support evaporating after Delta retired the type.
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Old Apr 22, 20, 2:23 pm
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Unless they are getting a dumpster fire deal in the exchange (which is probably what it is given the economy and MAX issues), I would have thought they'd go the A320NEO route given their love affair with Airbus as of late.
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Old Apr 22, 20, 2:26 pm
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Originally Posted by ethernal View Post
The FAA is (rightfully) digging deep before providing a clean certificate.
Oh, well, if the FAA is on the case, that's a relief. The FAA has disgraced itself so utterly in this era, European and Asian regulators no longer take its cues.

Originally Posted by mattp1987 View Post
I do think it's fair to point out that many media outlets often miss the mark on technical reporting. Outside of aviation-specific media outlets, I wouldn't expect most journalists to have a thorough understanding of aerospace engineering.
It's easy to deride MSM reporting on aviation issues when you're talking about Brandi X. from NewsCenter29 screwing up facts in a live standup. But the MSM also publishes Fallows, Langewiesche, Clive Irving, etc., and numerous other well-informed, well-sourced ex-MSMers like Jon Ostrower exert big influence in aviation coverage. It ain't all Brandi.
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Old Apr 22, 20, 2:26 pm
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Originally Posted by sleuth View Post
Unless they are getting a dumpster fire deal in the exchange (which is probably what it is given the economy and MAX issues), I would have thought they'd go the A320NEO route given their love affair with Airbus as of late.
That's what I thought, too. Unless this is a trick to get Airbus to give Delta a better deal for more planes.

Or maybe that was a trick to get this order out of Boeing. Delta has also shown a great deal of interest in the 797 program.

-J.
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Old Apr 22, 20, 2:41 pm
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Originally Posted by GW McLintock View Post
That's what I thought, too. Unless this is a trick to get Airbus to give Delta a better deal for more planes.

Or maybe that was a trick to get this order out of Boeing. Delta has also shown a great deal of interest in the 797 program.

-J.
This is about shedding cashflow losing lease obligations. Delta does technically lease a few Airbus but I do not believe they are leased from Airbus and therefore nullification of the leases is not possible as part of an order agreement. Which is unfortunate because Airbus has a much stronger balance sheet than Boeing right now and so would be in a better position to do that sort of arrangement on better terms (especially since Airbus could - at some point - successfully re-lease the frames in the future).

And let's not kid ourselves - the originally envisioned NMA/797 was already on life support pre-COVID; it's dead now. Boeing's next new aircraft will almost certainly be an NSA.
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Old Apr 22, 20, 2:48 pm
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Originally Posted by GW McLintock View Post
...Delta has also shown a great deal of interest in the 797 program. ...
~6 months ago Boeing pushed the program launch date for 797 (aka Mid-Market Airplane "MMA" and New Mid-Market Airplane "NMA" and a few other acronyms) downstream by at least a year ... given the current collapse of air travel demand, it's probably highly unrealistic to expect them to kick off a new model for at least two more years (and that presumes all the iterations associated with design, analysis, test program development/planning, and customer sales/marketing discussions continue at the level they did for previous programs)
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Old Apr 22, 20, 3:21 pm
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Originally Posted by Duke787 View Post
I understand the business aspect of this (which makes a fair amount of sense -- especially given the desperate situation BA is in and the ability for DL to effectively take the lease payments off their books in return for bargain basement new planes they won't need to pay for in the short-term).

As a traveler though, I'm in the camp of never getting on a 737Max and this would put a dent in my view on DL and would lead me to avoid DL in certain situations where typically I am completely brand loyal (unless pricing differential is crazy).
I don't. Boeing needs cash coming in, a lease is cash coming in (today). future aircraft deliveries, who knows. If the argument is against the fuel efficiency, who cares (in the med term... fuel is dirt cheap.. in fact DL might be able to fill their clapped out aircraft with crude and get paid to do it..).

I personally like the MD95 a lot, very quiet up front. Its a great little aircraft, and one built by a company that over-engineered their planes rather than going all cheapskate (despite the management from MD taking over BA, it was more the MD military side...).
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Old Apr 22, 20, 4:08 pm
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Originally Posted by devans999 View Post
There is nothing unstable about the plane at all. The only problem is it flew a bit DIFFERENTLY than the NG, in a very few corner cases. They wanted to keep the flying characteristics the same as NG in all cases, so pilots wouldn't have to get a new type certificate. That's it. If they had gone the route of needing pilots to do a full training on it, they wouldn't have needed MCAS at all. In their pursuit to make it "feel" like the pilots were flying an NG, they screwed up the MCAS. The plane would be perfectly fine if they disabled mcas, but nobody would buy it because they'd have to get an entire roster of max only pilots.
THIS THIS THIS

The best solution to the "problem" was for Boeing to disable MCAS and throw compensation at their customers to pay for retraining to fly the MAX. But because the FAA got caught out for missing the major issues with the MCAS system, they now have to subject Boeing to sufficient mortification and penance (in the form of correcting MCAS and all the knock-on effects of that) to convince other regulators and the flying public that things are "fixed." On top of that, Southwest categorically rejected the straightforward fix because they didn't want to upset their spoiled pilot's union or invest in rudimentary crew scheduling software to accommodate more than one pilot group. Remember, Southwest retired the -300s not because they were EOL, but because the FAA refused to let pilots hold a rating for the Classic, NG, and MAX all at the same time. When the MAX grounding happened, they were squeezed for capacity, all because of the arrogance of their pilots union and the monomaniacal obsession with "One Fleet Type"
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