Delta Air Lines this week canceled an order for 787 long-haul aircraft from Boeing Co., unwinding one of the last big deals that Minnesota-based Northwest Airlines made before Delta acquired it seven years ago.
The move removes from Delta’s and Boeing’s books an order for 18 planes valued as high as $2.1 billion that was formally placed by Northwest in 2006 and was in limbo much of the time since. It was held up by production issues at Boeing, the logistics of merging Delta and Northwest and the global economic downturn and slow recovery.
Northwest was the first U.S. airline to order the 787, a long-range, 220-seat aircraft that was still on the drawing board at the time. The deal was a big moment for Northwest, which was then restructuring in bankruptcy. It signaled renewed growth and positioned Northwest to be a launch partner for the plane Boeing called the Dreamliner.
Executives at Northwest planned to use the 18 planes on international routes that it then served with an aging fleet of 14 Boeing 747s and some newer A330s of Europe’s Airbus Group.
In October 2007, about a year before the first 787 was scheduled to be delivered, Boeing notified Northwest that production delays would push back delivery into 2009. The order went on hold in 2008 when Delta and Northwest agreed to merge and, in 2010, Delta arranged with Boeing to defer a decision on the order until no later than 2020. Two years ago, after Delta started to retire the old Northwest 747s, its executives examined new long-haul aircraft at Boeing and Airbus. Ultimately, they ordered 25 A350-900s and 25 A330-900s from Airbus, new versions of planes the company was already flying.
To date, Delta has retired nine of the old Northwest 747s, and the rest will likely stop flying as it takes delivery of the new Airbus long-haul planes starting next year.
“This business decision is consistent with Delta’s fleet strategy to prudently address our widebody aircraft needs,” Greg May, the executive in charge of Delta’s fleet, said in a statement.
May noted that Boeing is still a key supplier and that the two firms are proceeding with an order for 120 Boeing 737-900ER planes, which are set to form a new core of its 840-unit fleet.
Chicago-based Boeing has sold almost 1,200 787s over the past decade and delivered the 500th model last week. The twin-engine 787 stands out from older long-haul aircraft because it is built with lighter-weight carbon-fiber composite, giving it greater fuel efficiency.
“We’ve been working closely with Delta as their needs have evolved since inheriting the order from Northwest,” Boeing said in a statement. “Delta is a valued customer and we continue working with them to meet their future fleet requirements.”
For Delta, the decision resolves perhaps the last major potential financial obligation it acquired with its purchase of Northwest. The company earlier this month told investors that it is well on track to meet a goal of reducing its pension liability, which grew with the Northwest deal. Delta long ago worked out other major financial and operational matters associated with Northwest, including the disposition of real estate, technology systems and frequent-flier obligations.
Atlanta-based Delta has maintained a major presence in the Twin Cities since acquiring Northwest. The airline and its partners operate seven out of 10 flights at Minneapolis-St. Paul International Airport, which is Delta’s second-largest hub by available seats. Delta also operates call centers in the Twin Cities and Chisholm and a maintenance base at MSP, employing about 8,000 people overall in the state.