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Delta Air Lines Vs. the Airbus A380

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Currently the largest plane based on the number of passengers it can transport, the Airbus A380 seats well more than 500 passengers on two full decks of this megaplane. Airbus, a subsidiary of European Aeronautic Defense and Space Company (NASDAQOTH: EADSY  ) , markets the A380 as a way for airlines to transport more passengers than ever before.

But Delta Air Lines (NYSE: DAL  ) disagrees with the economics of the aircraft in a move that is expected to have Delta order none of these planes.

Mega-plane economics
Conventional wisdom would teach us that giant aircraft would have lower cost per passenger and be more economical for heavily traveled routes. However, Delta Air Lines CEO Richard Anderson disagrees, saying, "The A380 is, by definition, an uneconomic airplane unless you're a state-owned enterprise with subsidies."

Delta has chosen smaller, more fuel-efficient aircraft over the megasized A380. This has implications beyond merely Delta itself however. The Atlanta-based airline took a 49% equity stake in Virgin Atlantic, an airline with the potential to take delivery of A380s.

An analyst from Deutsche Bank expects that Delta will pressure Virgin Atlantic to not buy these A380s, following in Delta's existing stance on the aircraft. But the first delivery of an A380 to Virgin Atlantic is scheduled for 2018 so there is still time to make a decision.

For its own part, Virgin Atlantic has not given a position on the A380 regarding the exact timing of deliveries. Additionally, no U.S.-based airline has ordered any. However, Delta's aircraft strategy extends beyond the A380.

Manufacturer effects
Delta has taken an unconventional approach to plane buying overall. It made news last year when it acquired 49 used MD-90 aircraft for bargain basement prices with the intention of refurbishing them for service. Additionally, Delta's first Boeing (NYSE: BA  ) 787 is not expected to arrive until 2020 in contrast to United Continental Holdings' aggressive approach to the 787 involving 65 orders and the airline being the launch customer for the stretched 787-10.

But Delta is not entirely shunning Boeing and Airbus. The airline is taking delivery of its first 12 of 100 Boeing 737-900s this year and Delta also placed an order for 30 Airbus A321s and 10 Airbus A330-300s. But in keeping with Delta's strategy of not overspending on the newest of aircraft, neither the Boeing or Airbus planes are the latest models coming into production over the next few years.

While the lack of orders from Delta is a moderate disappointment for Boeing and Airbus, there are plenty of other airlines ready to pick up the slack. Other carriers are still on the path of building fleets of the most modern planes even if it costs more. So, fortunately for the manufacturers, Delta's strategy is unique to the industry.

Older planes, new strategy
Delta Air Lines has been all about new strategies and better using capital for shareholders. In addition to choosing less expensive aircraft, it is using those funds to refurbish airport terminals and provide both a dividend and share buyback. While not completely shunning new aircraft, Delta's approach saves significant funds over conventional industry approaches. Investors looking for an airline with a different take on the industry should take a further look at Delta Air Lines.

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Read/Post Comments (17) | Recommend This Article (5)

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  • Report this Comment On October 09, 2013, at 10:09 AM, Tyeward wrote:

    I really don´t see any U.S carriers ordering the A380. I could be wrong and they might change their mind in the future, however it doesn´t really fit into the plan of U.S carriers. If Delta was a mega one hub operation, I think they would actually see the logic in it´s purchase (or any U.S carrier for that matter). Destinations served by U.S carriers and their choice of flight equipment for international reach is more for strategic coverage than anything else. If Delta were to purchase the A380 and put it on the JFK-FRA route (as an example), it would need to reshuffle it´s network to provide additional feed into JFK to mix with the O&D traffic from there to justify the route and the equipment used. Well that would put what they have available as a service into question from their other hubs as they would be stealing from other hubs to pool for that route just for the sake of justifying the equipment. Service would more than likely have to be downsized a bit at other strategic bases that provide the same service with smaller aircraft not unless they have a really big overbooking issue and could use the network rework to move more connecting traffic out of the way. I don´t think Delta has that problem. What Delta has is a pretty good balance of demand and service renedered based off of that demand. If they want to champion A380´s being in any fleet, Virgin Atlantic is the carrier they would really want to do that with. It´s a single carrier out of a main hub station. An A380 fits a carrier like Virgin Atlantic. It only has one primary strategic location.

  • Report this Comment On October 09, 2013, at 10:27 AM, Layman2 wrote:

    I cannot see any US airline selecting the A380 as it does not fit into a US airline model. I do not fly to the US any longer but when I did, I was shocked by the lower standards in comparison to the best European and Asian airlines. Passengers are not pampered but are at best tolerated.

    I always try to get on the A380 when options become available, even paying the additional premium that Emirates and LH place on a A380 seat.

    The A380 flying experience is unsurpassed in the silence, lack of vibration and feeling of space. All of these are not priorities of US airline.

  • Report this Comment On October 09, 2013, at 11:01 AM, MJA64 wrote:

    Here's the key quote by Delta Air Lines CEO Richard Anderson "The A380 is, by definition, an uneconomic airplane unless you're a state-owned enterprise with subsidies."

    Here in the U.S., the airlines are not subsidized.

    The aircraft is not a money maker so that is why they are not being sold as predicted by Airbus. Even the smaller Boeing 747 is going through the same issue and it's more economically viable than the A380. Anyways, customers don't want to be treated as sardines in a can when traveling. The age of the ultra heavy 4 engine aircraft is sadly coming to an end.

  • Report this Comment On October 09, 2013, at 11:31 AM, reddwarfone wrote:

    I agree with Delta Airlines. The A380 doesn't fit in with how Americans fly. I have flown in a Boeing 737 and I have really enjoyed it. I just hope China doesn't build an airliner and try selling it to the world. That would not be good at all.

  • Report this Comment On October 09, 2013, at 12:10 PM, Iwantastiffdrink wrote:

    Anderson of Delta is easily the smartest guy in the room, when the CEO's of airlines gather. The A380 doesn't make sense for either Delta or Virgin Atlantic. BUT, both airlines so need to replace aging 747-400 aircraft with something of similar capacity (passengers and freight) in the next five years. So, what's the best choice?

    Clearly, the A380 is out. Which leaves the 747-8 Intercontinental which has 50 seat greater capacity than their current 747's plus much better efficiency and slightly greater range; OR the yet to be more ok'd 777-NextGen, which will be more economical per seat mile than the 747-8, but will hold decidedly less passengers and freight. So, what are both airlines going to do? They must consider limited slots at certain airports (Heathrow is at the top of the list) along with high passenger demand for the destination. Can a still-on-the-drawing-board 777-Next Gen suffice in these cases? Or is the 747-8 Intercontinental the best choice when balancing all the needs?

    My bet is that Virgin will back out of their A380 commitment in 2018, and both Delta and Virgin will place an order for both the 747-8 Intercontinental and the 777-NextGen. Whatever is ultimately decided, we'd all be hard pressed to argue with Anderson of Delta. This guy has got the Midas touch.

  • Report this Comment On October 09, 2013, at 4:09 PM, deutschlandheute wrote:

    If Delta or any other American Airline don't want the Airbus that's ok we can survive without them buying the A 380, but on the Reverse Lufthansa will not buy any Boeings anymore either. We sell them to other Airlines, like Emirates, etc. and JAL stoped buying Boeings and goes Airbus instead.

  • Report this Comment On October 09, 2013, at 4:30 PM, AcuraT wrote:

    Delta already has plenty of different types of planes to support. They have over 20. That includes the rarely used Boeing 717 which is a still-born birth from the dying McDonnell Douglas which were owned by Airtran. Not a bad airplane, and not even that old, but they have a unique cabin that pilots have to learn for that one specific aircraft. Delta is the least unifed airliner of any airline globally. So far they are making it work, only time will tell if it works long run.

  • Report this Comment On October 09, 2013, at 4:32 PM, BlueMike wrote:

    Anderson is having an Aboulafia moment. His anger is aimed at the likes of Emirates, but in doing so with a poor choice of words, he casts a shadow on the manufacturer he has just bought a raft of new wide bodies from.

    Xenophobia is a funny thing and always creates comments similar to those posted herein.

    Virgin can not just walk away from their A380 order. They have major deposits, non-refundable, in place. To suggest they will go for the B777X is naive at best, and to suggest the B748i is laughable.

    Virgin is tied to Airbus for atleast until such time they use up the deposits made. The A350-1000 will be a show-in for them.

    So, we'll leave you US Boeing Fanboys to continue with your whimsical desperate hopes for a major B748i order. Let's face facts; she's an ancient frame, beaten above by the might A380 and beaten below by the B777-300ER today, and absolutely eclipsed in the future by the B777X.

  • Report this Comment On October 09, 2013, at 5:12 PM, RobertPhoenix wrote:

    If any airline wants to increase its market share in an airport where slots are limited, then the only way to do it is to buy bigger aircraft. (where do you think you can see the most A380 on any given day - Heathrow - with Emirates flying 5 A380 every day to the same destination)

    I believe Delta also complains that they don't have enough slots at Heathrow ( Duh ! )

    The idea that an A380 is uneconomic is ludicrous, and not supported by facts - unless you mean flying it when you can't fill it. So it is not going to be the right plane for many airlines e.g. Southwest.

    The real threat to the A380 is the possibility that countries will build more and more airport capacity to support ever increasing travel. There are many places in the world where that is simply not going to happen.

  • Report this Comment On October 09, 2013, at 6:26 PM, glennfparker wrote:

    I disagree with the assessment of the B-747I. Still queen of the skies and is a "new" airplane, just with the same graceful look! Of most importance is its lower operating costs and, quite frankly, fits more markets than the one-fit only of the A-380.

  • Report this Comment On October 09, 2013, at 9:02 PM, rotorhead1871 wrote:

    the 380 is very limited, it will be out of production in 10 years it is now only accepted in a handful of wont get any better.....

  • Report this Comment On October 10, 2013, at 8:07 AM, BlueMike wrote:

    Limited ? It flies to 9 of the 10 busiest airports in the world. Nearly 100 airports across the globe are A380 capable. For your information, the B748i requires similar airport modifications as the A380.

    Passenger figures are rising year on year, and the A380 is the only aircraft capable of carrying large numbers whilst at the same time airlines are able to increase comfort and incorporate luxury touches, always welcome compared to some sardine can airplanes, because the A380 has the lowest CASM currently of any commercial airliner.,

    No amount of bashing from the USA will stop the A380; indeed, airports in the US are actively courting A380 airlines, because they too recognise that the A380 is a major game changer:

  • Report this Comment On October 10, 2013, at 9:59 AM, MJA64 wrote:

    Sorry BlueMike - Your infatuation with Airbus is blinding you from the real topic of this article. Airbus made another bad decision to make the largest airliner in the world. (ie. A340) The sales of the iconic B747 was at a steady pace when the A380 was being designed. A380's sales is your proof but I do understand that the European Union will do anything to save face and throw good money after bad money to protect their pride. The current market can't support the behemoth aircraft and that is why many U.S. Airlines are not ordering it.

  • Report this Comment On October 14, 2013, at 11:30 AM, BlueMike wrote:

    MJA64, you are wide of the mark. When someone has to resort to accusing another of a personal nature, then they have lost the argument. However, I will answer you.

    I view Airbus and Boeing with equal measure and objectivity.

    It is inappropriate to claim Airbus made a mistake with the A380 when the airframe is still so young; perhaps no longer its infancy, but certainly not at the stage where we can look back and make draw conclusions as to the type's success.

    Nice of you to subjectively drop in the word "iconic" before the B747; it lends a reader to assume you are a Boeing fanboy, but at least it enables one to gauge from what level one needs to base one's response on.

    Sales for the B744 were dwindling. The -500X and -600X| had both been rejected by the airlines. Boeing was preparing to base their future wide body strategy on the B777. There were imaginative future passenger figures thrown around by both manufacturers, but ultimately, Boeing decided to go up against the A380.

    All credit to Boeing; the managed to drag a 40 year old design into the 21st century by way of the B748i and B748F. In fact, so good was the B748F up against the A380, it was part of the reason Airbus shelved the A380F "for now."

    Some facts can not be disputed. The A380 is the CASM leader and will be for a while longer. Just look at the wing of the A380; it's wingspan is greater than its length. So much engineering has been built into the wing for higher weights and larger variants in the future.

    Believe it or not, aviation does not revolve around the US air traffic trends. I must correct you on one thing though; NO airline from the USA has ordered it. That is because the American traveller expects there to be flight ATLEAST every hour EWR-LAX, JFK-LAX etc and every small town with an airport to have atleast RJ service.

    Compare that to the asian "shuttle" routes, where B777-300ERs and larger are servicing them, again almost on an hourly basis, but they are filling those wide bodies and passenger figures are increasing, some at more than 10% per year.

    For future mass passenger transportation, the A380 is the only option.

    I am not sure where you get the notion that money continues to be thrown at the A380. Costs expect to amortised, absorbed and accounted for before frame 250. You should be aware that Airbus is a publically traded company and their accounts are available to all for scrutiny should you have the time to disprove your claim. Perhaps you can provide evidence of money being thrown to preserve pride.

    From where I am sat, the only pride being effected is that of those who hold a light to the B747. Amazing as she was, her time has come to retire.

  • Report this Comment On October 14, 2013, at 4:45 PM, thomas85225 wrote:

    Delta Air Lines CEO Richard Anderson disagrees, saying, "The A380 is, by definition, an uneconomic airplane unless you're a state-owned enterprise with subsidies."

    or a mild east oil producing countries

    So is Boeing with tax payer subsidies

    The 747 in 1961 was Boeing entry in to the CX-X and Heavy Logistics System aka the C-5

    The A380 has 262 orders and 103 deliveries

    The 747-8 has 111 orders and 52 deliveries

    The 787 and 936 orders and 89 deliveries

    How many airlines will need a 777-X the can fly 9000 mile and carry 400 passengers?

    Boeing 787 is a Risk Sharing Program

    See The Post and Courier

    The state government of Washington and south Caroline has given Boeing tax break to the 787 program alone with tax payer money

    All tax payer money should be a bond issues since Tax payer are not Boeing stocker holder and all money to Boeing should be a Bound issues

    The government of Japan has Japanese industrial participation was very important to the project, with Japanese companies co-designing and building of 35% of the aircraft. This was the first time outside firms were given a key role in the design of Boeing airliner wings. The Japanese government also provided support with an estimated US$2 billion in loans.[51] On April 26, 2006, Japanese manufacturer Toray Industries and Boeing announced a production agreement involving US$6 billion worth of carbon fiber, extending a 2004 contract and aimed at easing production concerns.[4] In May 2007 final assembly on the first 787 began at Boeing's Everett, Washington plant.[52]

    The United state Government has provided subsidy to Boeing in south Caroline as Boeing lay off employee in Washington state and will hire worker in south Caroline see

    Boeing Ceo got a 27 millions bounces and Boeing Ray Conner got a 60,000 share of stock and 747-8 and 787 has yet to make a profit, The tax payer got zero

    In 1997 Boeing did not build the double decker 747-500 & 747-600 or the MD-12, 797 X-48C, Boeing sonic cruiser

    Many airlines are not replacing there exist Boeing aircraft, since Boeing CEO James McNerney, and GE CEO Jeff" Immelt are member of the board on the Import-Export Bank, that made better loan to foreign airlines at a lower interest rate

    Delta, and other Airline Group have file law suits against the U.S. Export-Import Bank over Air India Loan Guarantees

    The list of indictments of Boeing Chairman and CEO W. James McNerney Jr. continues to grow.

    His administration at Boeing began in 2005 at about the same time as development of the 787 began in earnest. All of the delays and flaws of the project have happened on his watch.

    Jim" McNerney, the CEO got a 27 million bonus and Ray Conner get 60,000 share of stock

    CEO W. James McNerney should be fire over he’s action at The U.S. Export-Import Bank that cost Boeing orders

    Boeing Falls Behind Airbus in Orders and Deliveries - 24/7 Wall St.

    But Delta Air Lines disagrees with the economics of the aircraft in a move that is expected to have Delta order none of these planes. Correction Delta is buy from Airbus

    By Rich Smith September 4, 2013 | Delta Air Lines (NYSE: DAL ) is expanding its air fleet. On Wednesday, Delta announced plans to buy 40 new Airbus aircraft for delivery between 2015 and 2017. The planes in question will include 10 wide-body A330-300 airplanes and 30 narrow-body A321 jets.

    Delta has orders 18 787s and 109 Boeing 737s, Delta Air Lines said it will buy 40 more Airbus planes

    British Airways Poised to Dump Boeing

    British Airways Poised to Dump Boeing - 24/7 Wall St.

    Singapore Airlines likely to convert orders to A350-900 & -1000

    Lion Air orders 234 A320 Family aircraft › Press centre › Press releases

    American Airlines takes first of its 260 Airbus airplanes on order


    Airbus, ANA & JAL in Discussions for A350 Orders

    Air China Places Order for 100 Airbus SAS Aircraft

    Airbus wins $7 billion Philippine Air order

    EasyJet Sets $11.5 Billion Deal to Buy Airbus A320, Crushing Boeing

    EasyJet will buy a number of planes from Airbus in a setback to rival Boeing Co. (NYSE: BA), which has had a share of setbacks due to problems with batteries on its 787 Dreamliner. The battery problem took the Dreamliner out of service for months.

    Air India will take delivery of their 787s... But now Air India wanted compensation for 787 failures to meet performance guarantees.

    Air India and Jet air has decided to sell five out of its eight Boeing 777-200LR aircraft owing to changes in market dynamics due to the Global recession, steep increase in fuel prices and poor yields on non-stop routes,

    Vietnam's VietJet agrees bumper $8.6 billion Airbus order, plans ...

    Sep 25, 2013 • The Vietnamese airline would buy mostly A320 planes using loans from foreign banks, managing director Luu Duc Khanh told Reuters in a telephone

    Poland's LOT gives Boeing three months to settle over Dreamliners

    787 problems stir complaints from Norwegian, Polish airlines

    Airbus A320neo + Boeing 737MAX - Orders and Commitments

    Fed ex once look into buying A380F to replace the existing fleet of Dc-10

    FedEx fly three Dc-10 into Europe each day and by replacing the Dc-10 with A380, the A380 would only be need to fly once a day into Europe saving the operation cost of other two Dc-10 (1997 study)

    Each aircrafts has 3 to 5 crews making a salary and benefits

    The Airbus A350-900, A320, A330, Kc-30 and the A-380 are in production in plant once own by Boeing

    the 787-10, 777-X, 737Max, ARE NOT

    The 787-10 and 777-X and some of the 737Max will be build and assembly in South Caroline, Boeing Renton and Everett and only completions center now

  • Report this Comment On October 15, 2013, at 2:44 PM, thomas85225 wrote:

    In July 2013, confirmed orders for the 747-8 totaled 107, including 67 of the freighter version, and 40 of the passenger version.

    Boeing 747-8 is two years late 2.04 billion over budget and overweight and 52 deliveries

    Boeing did not build the double decker 747-500 and -600 in 1997 due to the 1997 Japanese economy, Boeing was not able to attract enough interest to launch the aircraft.[84]

    BA warms to A3XX plan

    12:00 19 Mar 1997 British Airways says that it will buy the Airbus A3XX, "-if it is commercially viable", and has criticised Boeing for dropping its plan to develop the 747-500X/ 600X models.

    BA chief operating officer Dr Alistair Cumming says: "We frankly commend Airbus for their bravery in taking this step." He adds:" If we can make money, and it meets our timescale, we'll commit to that product [the A3XX]."

    (Or the MD-12 in 1990, Boeing Sonic Cruiser, X-48c the 777-100, Combi, 777-x has been offer before)

    Air India and Jet Airare lease out there 777's

    Air India has decided to sell five out of its eight Boeing 777-200LR aircraft owing to changes in market dynamics due to the Global recession, steep increase in fuel prices and poor yields on non-stop routes,

    Airbus has sold 262 A380 and delivery 103 A380

    Boeing sold 694 747-400 to 63 operator, the 747-8 has only been sold to 15 operator

    The 787 was start on 3-28-2003 and only 89 aircraft delivery to date

    (Boeing has rebuild 100 MD-11F for the airlines)

    But at the end of the day it’s about fuel cost, labor cost, operating cost, Available Seat Miles see

    and what is the stock price of the airlines ?

    Delta $24.05

    Enough to buy new aircrafts?

  • Report this Comment On March 07, 2014, at 1:26 AM, Cookie466 wrote:

    You idiots. Airbus and Boeing are two major parasitic monopoly transport airliner manufacturers. Take a guess as to "why"

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