ATLANTA – Delta Air Lines has ordered 37 new Airbus A321 airplanes that, in part, will replace MD-88 aircraft that are heavily flown out of Minneapolis-St. Paul.
The announcement, made Friday by the Atlanta-based carrier, is a part of Delta's long-awaited retirement plan for its aging narrow-body fleet, which is among the oldest in the U.S. industry.
The deal will help bring its A321 total order count to 82 as Delta phases out the remaining 116 of its louder, less fuel-efficient MD-88s, which are on average 25 years old. The A321 will burn 28 percent less fuel than the MD-88 and reduce maintenance costs by 30 percent, company executives said.
Twin Cities passengers began flying the MD-88 with greater frequency after the 2009 merger with former Eagan-based Northwest Airlines. At the time, newly merged Delta reshuffled its fleet strategy, making Minneapolis-St. Paul a hub for the older aircraft while also drawing down its use of the roomier Airbus A319 and A320 at MSP.
Delta, greatly lauded on Wall Street for its cost discipline that recently earned the airline investment grade status by rating agency Moody's, has waited for the right timing and right deal. Airbus plans to stop production on its current generation A321 in 2018, likely giving Delta a discounted rate on the large order.
"The order for the A321s is an opportunistic fleet move that enables us to produce strong returns and cost-effectively accelerate the retirement of Delta's 116 MD-88s in a capital efficient manner," Ed Bastian, Delta's incoming chief executive, said in a statement. "The order for the A321s is an opportunistic fleet move."
Delta executives declined to reveal just how good of a deal they got on the Airbus order, but Glen Hauenstein, the airline's incoming president, said "price is always a factor with airplanes."
Delta hopes to retire its entire MD-88 fleet by 2020, Bastian told a group of reporters Friday morning. Delta also has 50 Boeing 737 aircraft on order, which, when combined with the A321, will collectively replace the MD-88.
"We like to carefully pace our retirements," said Greg May, senior vice president of fleet strategy for Delta.
Delta confirmed the new order Friday morning following another big announcement Thursday of its order of 75 Bombardier CS100 jets worth approximately $5.6 billion at list price. This was the first order for the C-Series from a major U.S. airline following years of production delays and budgeting problems for the Canadian jet maker, which likely led to a better deal for Delta.
This purchase is a part of Delta's continual drawdown of its dependency on regional airlines, transitioning those flights into Delta's mainline aircraft over the coming years, May said.
The move supports Delta's long-term strategy of increasing the typical size of its aircraft while decreasing the number of 50-seat planes. Delta currently has nearly 400 midsize planes, including the MD-88, MD-90, Airbus A320 and Boeing 737, that seat around 150 passengers. By contrast, the airline expects its A321 to be outfitted with 192 seats.
The CS100 order will allow Delta to phase out its 50-seat aircraft contracted through regional partner Delta Connection. The new 100-seat aircraft are more fuel efficient and spacious than its smaller 50-seat aircraft, allowing Delta to accommodate a business class in each plane.
Delta's Minneapolis-St. Paul hub could also benefit from the purchase as one of the airline's two major U.S. maintenance facilities, with the other being in Atlanta. A Delta spokesman told the Star Tribune Thursday the company will likely scale up its Airbus maintenance operations at MSP as they continue to add more to its fleet.
The airline currently has about 1,300 aircraft in circulation.