Delta announced that it is entering into a deal with Boeing for 20 E190s and 40 new 737-900ERs upon ratification of a tentative agreement covering its 12,000 pilots.
The tentative pilot agreement provides enhancements to pilot compensation—including base pay increases—along with a revision of the airline’s profit sharing formula beginning in 2016. Additionally, this accord secures additional career advancement opportunities for Delta pilots while providing the airline with productivity enhancements and further fleet flexibility across the airline’s U.S. domestic system.
The E190 will be deployed on U.S. domestic routes and continue the shift of flying away from inefficient 50-seat regional jets as part of the company’s successful upgauging strategy. The pilot agreement would lets Delta deploy as many as 25 extra regional jets with 70 or 76 seats. The E190s are ex-Air Canada which Boeing took back as apart of the airline’s MAX order. The move to Delta is a net gain for Embraer even as Boeing offloads the aircraft.
Delta is also ordering 40 more Boeing 737-900ERs, augmenting an existing order taking it to 140 in total. Delta plans to deploy these aircraft as replacements for other narrow-body aircraft scheduled to retire through 2019. Most likely this is to replace retiring 757s.
The fleet update reflects a perennial issue for pilots – the growing size of regional jets. The accord lets Delta deploy as many as 25 extra regional jets with 70/76 seats, according to a summary sent to ALPA members. Delta would be able to deploy one new “commuter plane” for every two of the 100-seaters. This clearly puts pressure on current industry Scope Clause limits.
In summary, the Delta decision is consistent with how it buys aircraft. Delta is unusually risk averse and seeks used aircraft it can deploy. The E190s are no doubt coming at keen prices – Boeing can afford this because the airline is taking more 737s. Boeing keeps a critical customer (remember the recent big Airbus widebody order and earlier A321 order?) engaged. Embraer sees its footprint at Delta grow in a very important segment. One day Delta will want to replace those E190s and the E2 will have an advantage. And the ability to add a few more 76-seaters means that even Bombardier gets a look in.