Paris Air Show

United Snaps Up New Planes, Delta Makes Do With Old


A passenger looks out towards a Delta Air Lines plane at San Francisco International Airport

Photograph by David Paul Morris/Bloomberg

A passenger looks out towards a Delta Air Lines plane at San Francisco International Airport

It was a big shopping week in Paris for United Airlines (UAL): 35 new Airbus A350s and 20 787s from Boeing. Its rival, Delta Air Lines (DAL), didn’t buy a single plane during the air show and has been flying some jets that date to the early 1980s. The starkly differing strategies at the two largest U.S. airlines—a big-time fleet refresher vs. a penny pincher intent on wringing service out of old planes—present a very clear case study. Shareholders and customers are noticing, and so far they don’t appear to prefer that new-airplane smell.

Delta still flies a handful of DC-9s (average age: 34.6 years old) and a sizable fleet of MD-88s (average age: 23). The 747s acquired in its purchase of Northwest Airlines are approaching their 20-year birthdays. Amid this abundance of aging aircraft, Delta has scoured the used market for more. The Atlanta-based carrier sought as many as 50 MD-90s in 2010, praised as “very capital-efficient aircraft” by Delta President Ed Bastian at the time, and this year will begin receiving the first of 88 717 planes leased as cheap replacements for regional jets. Boeing stopped building the 717 seven years ago.

United was on something of a spree at the Paris Air Show, which concludes Sunday. The largest U.S. carrier filled it shopping cart with 10 of Boeing’s stretched model, the 787-10, and agreed to convert 10 of its older orders to the new, larger version. That brought United’s total 787 order total to 65, with the first of the longer models set to be delivered in 2018. The company also added 10 new A350s to a prior order of 25. The moves are designed to freshen its fleet rapidly on the legacy United side of the company, which merged with Continental to form the new United Continental Holdings. The company already flies six of the new 787-8 Dreamliners ordered by Continental in 2004 and is awaiting 49 more. (Delta’s last big jet order, by contrast, came in 2011, for 100 of Boeing’s 180-seat 737-900ER, with the first of those planes arriving in September.)

So far, Delta’s stodgy old airplanes haven’t translated into diminished customer-satisfaction measures. The American Customer Satisfaction Index released this month found that Delta scored highest among its legacy-airline peers, with a 68. United scored a 62, last place in the rankings.

Some of the money Delta’s not spending on new airplanes is going toward building mobile and Internet technologies and new airport facilities, specifically the new $1.4 billion terminal Delta opened at New York’s JFK International in May. The company is also planning to return $1 billion to shareholders through a new dividend it will begin paying in September, its first in a decade, and a $500 million share buyback. Southwest (LUV) and Allegiant Travel (ALGT) are the only U.S. airlines that currently pay a dividend.

In an interview last month with Bloomberg reporters and editors, Delta Chief Executive Richard Anderson said he’s a fan of “proven” technology and expressed his preference for waiting as new airplanes mature. The operating costs of an airplane’s later, stretched-out version “are always better than the original economics,” he said. Not that he appears ready to buy any new ones soon.

Bachman is an associate editor for Businessweek.com.

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Companies Mentioned

  • UAL
    (United Continental Holdings Inc)
    • $64.14 USD
    • -0.11
    • -0.17%
  • DAL
    (Delta Air Lines Inc)
    • $47.38 USD
    • 0.61
    • 1.29%
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