Does Delta A321 order shut the door on NMA? |

Has Delta shut the door on NMA? Over the last 5 years, we’ve heard extensive discussion of a potential new middle of the market aircraft from Boeing. Recently, the discussions morphed from a small twin-aisle to a single aisle similar to the 757-200 and -300 in terms of size and range capabilities. All along the process, Delta has been a strong supporter of the NMA, indicating they would seriously consider a new aircraft from Boeing and talking like a potential launch customer. But Delta's order for additional A321neos announced this morning cannot be good news for Boeing. Most of the industry believed that Delta would be a launch customer for the aircraft, with a significant fleet of 757s and 767s that aren’t getting younger as each day passes. New lift in the middle of the market range is something that Delta needs and needs relatively quickly given the age of its Boeing fleet. The order for 30 more A321neos, which are added to the 25 ordered in April, could be indicative of several things. The first is that Boeing isn’t about to pull the trigger on the NMA soon enough for Delta to seriously consider a launch order. Even if Boeing were to launch the program today, it would be 2027 by the time it entered service, and Delta, with expectations of a full industry recovery, will need additional replacement lift by then. That could be a reason to shut the door on NMA. The second is that perhaps it indicates that Boeing believes the race for an NMA replacement between the A321neo and 737 MAX 10 has already been won by Airbus. With most customers already having chosen the A321neo, it would take an all-new airplane to one-up the competition. After the pandemic, MAX debacle, quality problems with the 787, continuing KC-46 issues, and delays to the 777X, Boeing has a lot to fix on its plate and there may not be cash, short-term, to add the NMA development program to that mix. Because Delta was a proponent of NMA, could this mean the program has been moved to the back burner or canceled? How many times can one examine the business case for a new airplane, determine it doesn’t work yet, but keep talking about it? Has the Delta decision finally shut the door on NMA? The third is that the A321neo does everything Delta needs, providing the flexibility for traffic growth with a larger capacity than the 737-800 while providing the flexibility in range to operate trans-Atlantic as needed, as well as from coast to coast domestically. Delta has a number of A320s and 737-800s coming up for replacement over the next decade, and the key question Boeing needs to ask is whether they can woo Delta into the MAX family. We think that is doubtful, as the A321 has already beaten the MAX 10 and shut the door on NMA. With Air France making a full-court press with Airbus and the French Government for a stretched A220-500, Delta could become a second customer for that aircraft as a replacement for the smaller A320s and 737-800s, with the A321 providing 757 replacement and growth capacity for routes that could support higher volumes. The A220-500 would be a good fit at Delta, as its MAX-beating economics would provide Delta an A220/A321 strategy for narrow-body aircraft that would provide industry-leading economics and environmental performance for both small and large narrow-body aircraft. The Bottom Line: It appears that the Boeing NMA is dead. If it wasn’t, Delta would not be extending its A321neo order book, but waiting for the new aircraft that they have indicated an interest in for several years. A potential re-capture opportunity for Boeing appears to have disappeared as Delta has doubled down on the A321neo, and shut the door on NMA.

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