News:
Delta announced yesterday that it will retire its fleet of Boeing 777 aircraft permanently after its grounding for the COVID-19 crisis. Delta currently has 18 Boeing 777s, including 10 777-200LR models used on ultra-long-haul routes. The 777 first joined Delta’s fleet 21 years ago in 1999, and the carrier plans to replace them with the Airbus A350-900, which offers a 21% improvement in fuel burn.
Delta is the major US customer for the A350, with nine currently in service, four in storage, and twelve more on order.
Analysis:
Newer aircraft models are gaining additional capabilities in terms of range, and the Airbus A350-900 can accommodate the mission profile of the 777-200LR with much better operating economics. With restrictions on international flights in many markets, Delta does not need as many wide-bodies and decided to focus on the A350 for its long-haul needs.
The 777 joins the MD-80 and MD-90 as models Delta will ground this year, bringing the total number of aircraft not coming back once the crisis ends to 91 aircraft. It is likely that these will not be the only aircraft that will be permanently retired, especially if the return of traffic is as slow as experts are predicting, returning to 2019 levels in 2024 for international flights.
Insight:
Delta operates a varied fleet with multiple fleet types and is the antithesis of Southwest, which operates only one aircraft type. The optimal position on fleet types is likely somewhere between these two extremes.
Delta has successfully operated a mixed fleet including older aircraft for many years, trading higher operating economics for lower capital costs. As a result, the carrier has been able to own a higher portion of its fleet than other carriers, and operate with slightly higher margins and profitability. The strategy, prior to the pandemic, was working well.
Even prior to the pandemic, Delta planned to phase out several older types, including the MD-80 and MD-90 fleet. The Boeing 717, nee MD-95, while similar may be “right-sized” for the return to service as a 100 seater, and may survive longer than the other former McDonnell-Douglas counterparts. But the A220 mitigates against the 717.
Delta’s other wide-body aircraft includes a fleet of aging Boeing 767s plus A330s that it inherited from the Northwest merger. The carrier has A330neos on order to replace those older aircraft, but will likely defer deliveries until demand begins to return or replace older A330s or 767s with the A330neos on a one for one basis.
A crisis provides airline a perfect opportunity to rationalize their operations, streamline their fleets, and standardize on fewer aircraft types. Delta isn’t letting this crisis go to waste.
