MIAMI — Wednesday afternoon, Delta Air Lines announced that it will acquire up to 20 Embraer E190 and 20 Boeing 737-900ER aircraft from The Boeing Company.
Now, this announcement probably sounds familiar, and it should.
In June 2015, Delta announced that it would acquire 20 E190s and 40 737-900ERs from Boeing, pending its pilots approved a new pilot contract which included a pay scale for the E190, a decrease in profit sharing, higher pay, and pay for the A350. However, Delta’s pilots rejected the contract by a wide margin about a month later, and during the second quarter conference call, Delta’s CEO Richard Anderson announced that the orders would be cancelled since the pilot contract was rejected.
Since July, nothing has been said about adding the E190s or the 737-900ERs until Wednesday’s announcement. Delta explained in a press release that “the order announced [Wednesday] offered Delta more compelling economics over a previously cancelled order that also included Boeing-held E190s.”
Since Delta pilots rejected the contract in July, there has been almost no mention of the pilot contract, and there is no mention of the pilot contract being ratified anywhere in the press release.
When the original order was cancelled, many people started to question as to whether pilot contracts are linked to aircraft orders, but based on the latest move by Delta, it would seem that there is not much, if any, relation at all. Although a spokesperson with Delta Air Lines explains that Delta was able to purchase the E190s and additional 737s under the current contract.
Delta’s pilot contract is up for ratification starting December 31, but ratifying it is not super time sensitive as the pilots will continue working under the existing contract until the ratification process is complete.
“Delta continues to look for opportunities to deploy larger aircraft, which bring customer experience enhancements and improved economics, across its fleet,” said Greg May, Delta’s Senior Vice President – Supply Chain Management. “This aircraft order is another example of Delta’s unique fleet strategy to deploy a mix of new and used aircraft, maintain low capital costs, and leverage significant capacity flexibility to produce superior returns for our shareholders.”
Since in the press release Delta says there was “more compelling economics over a previously cancelled order that also included Boeing-held E190s,” it appears that Delta may have received a better deal from Boeing to take the E190s off of its hands; Boeing acquired the E190s as part of its deal with Air Canada to order the 737MAX. Boeing has started to acquire the E190s from Air Canada, and it will receive the remaining planes by the end of 2016 which are all being parked in the desert in Tucson, AZ.
The E190s are expected to begin flying for Delta in early 2017, and they will be configured with 12 first class, 16 Comfort+, and 70 main cabin seats. The 20 98-seat-E190s will be a nice complement to Delta’s strong fleet of 110-seat-717s; as of now, 84 are in service with seven more expected to finish the conversion process sometime early next year.
With the addition of 20 more Boeing 737-900ERs, Delta will have 120 in its fleet by 2019, and on Wednesday, Delta took delivery of its 50th Boeing 737-900ER. Delta is utilizing the -900ERs as well as the 45 A321s it has on order to replace its aging 757 and 767-300s. The first A321 is expected to be delivered during the first quarter.
As of note, the contrarian TechOps driven carrier has not ordered the 4th generation 737MAX.
Thursday morning during Delta’s Investor’s Day, the question about the E190 and 737-900ER order the previous day was the very first question asked; based on Wednesday’s order, there are no contingencies on the order, Delta’s President, Ed Bastian acknowledged. Bastian explained that “we are not going to limit growth opportunities on pilot contracts, and the economics of the deal improved a lot of the six months.”