Delta to buy all its jets from Boeing for 20 years Carrier's first order is 106 planes for $6.7 billion

March 21, 1997|By BLOOMBERG NEWS

ATLANTA -- Delta Air Lines Inc. said yesterday that it will buy all its new jetliners from Boeing Co. for 20 years or more, starting with a 106-plane order valued at more than $6.7 billion.

The nation's third-largest airline also has the option to buy 538 more planes, making the agreement worth as much as $35 billion to Boeing.

Boeing, locked in a fierce fight for sales with Airbus Industrie of Europe, probably gave Delta a discount of 20 percent off list prices, analysts said.

"You can bet Delta won a pretty good deal for agreeing to shop exclusively at Boeing," said Peter Jacobs, an analyst at Ragen MacKenzie in Seattle.

The agreement is similar to one Boeing reached in November with AMR Corp.'s American Airlines. American agreed to buy 103 Boeing jetliners valued at $6 billion.

Shares of Seattle-based Boeing BA rose 87.5 cents to $104.875. Atlanta-based Delta's DAL fell 12.5 cents to $84.375.

Delta said it would buy 70 Boeing 737s, the smallest aircraft the manufacturer makes. Delta also said it ordered $800 million in 737 engines from CFM International, a joint venture of General Electric Co. and Snecma of France, and ordered five 757s and 31 767s, a plane that is used mostly to fly across the Atlantic.

Delta did not announce who would supply the engines for these planes. GE, United Technologies Corp.'s Pratt & Whitney unit and Rolls-Royce PLC are the only manufacturers.

Deliveries of all the new jetliners will start in 1998.

"We believe this is the most competitive fleet plan in the industry," Delta Chairman Ron Allen said.

Included in the 767 order are 21 767-400s, a plane Boeing started offering customers this year. Delta said it will be the first customer for that aircraft.

Delta's decision was a blow to Airbus, which fought hard to win at least a portion of the order. The company went so far as to run ads on Atlanta television stations extolling the virtues of its aircraft.

With Delta and American buying only from Boeing, Airbus is shut out of sales to two of the three biggest U.S. airlines, though it recently signed a tentative agreement to sell $4.4 billion in planes to Northwest Airlines Corp., and is vying with Boeing for a $5 billion order to Continental Airlines Inc.

Pub Date: 3/21/97

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