Delta To Issue Major Widebody RFP For 747/767 Replacements

[WorldTraveler]

a good article on why DL's prudent capital spending program will make a difference in value for years to come compared to peer airlines even if profitability becomes similar. 
 
http://www.fool.com/investing/general/2014/03/17/one-of-these-airlines-is-not-like-the-others.aspx
 
according to the article, DL has 1/2 to 1/3 the capital commitments of UA and perhaps 1/4 of AA.
 
For both AA and UA, the majority of free cash will go to debt service and capital expenditures.
 
good logic on the Rolls piece, Dawg, and also highlights for both engines and airframes the value of ordering after other carriers so manufacturers know what orders can make or break their market share in the business.
 
I'm sure DL has talked with RR more than once about severing its MRO relationship with AA and moving it to DL. 
 
Since Mexico isn't doing any engine overhauls (are they?) I doubt they will start with a huge engine which is as strategically important as the biggest Trents are.

 

[dash8roa]

I too think DL will go for some 777-300ER's as Boeing will offer them a great deal to keep the line moving. Also, DL seems more price conscience, thus the 717 deal and the hunt for MD-90's. I think they are smart in not limiying their decisions solely on fuel burn.
The initial outlay of cash for replacement aircraft also has to be factored in along with fuel costs. Kind of like people who trade a paid off car in good condition for one that gets maybe 4 to 5 more miles per gallon but now have a 5 to 6 year car payment along with higher taxes. Not too smart of a move financially speaking.

 

[metopower]

Question for Dawg...AF just choose the GE engine for their 787. I wonder if that will influence DL's choice.The inherited orders for 787's were for the dash 8 model one that DL has said they do not want. How common is the GE next gen engine to the GE 90?

 

[topDawg]

a good article on why DL's prudent capital spending program will make a difference in value for years to come compared to peer airlines even if profitability becomes similar. 
 
http://www.fool.com/investing/general/2014/03/17/one-of-these-airlines-is-not-like-the-others.aspx
 
according to the article, DL has 1/2 to 1/3 the capital commitments of UA and perhaps 1/4 of AA.
 
For both AA and UA, the majority of free cash will go to debt service and capital expenditures.
 
good logic on the Rolls piece, Dawg, and also highlights for both engines and airframes the value of ordering after other carriers so manufacturers know what orders can make or break their market share in the business.
 
I'm sure DL has talked with RR more than once about severing its MRO relationship with AA and moving it to DL. 
 
Since Mexico isn't doing any engine overhauls (are they?) I doubt they will start with a huge engine which is as strategically important as the biggest Trents are.

first, Rolls wont "break" its deal with AA, Delta isn't going to do T800 and RB211 overhauls. Yes, the RB211 overhauls will start to dry up as AA parks them.I expect TAESL will pick up V2500s in its place. While IAE isn't owned in part by RR anymore, they still supply parts for the engine. Its only natural for AA to overhaul them as the RB work goes away and it is a big opportunity to be the only carrier to overhaul V2500s in the US.
They will get a huge fleet of IAE airbuses from US, along with the new AA 321s coming in being V2500 powered....it would make it economical and give RR/AA a chance to get a hold of the UA, DL, NK work also.  
This is why i have long argued Delta should bring the engine in house now that they have enough (~130 engines) to make it economical. (and would be able to, IMO, aggressively compete for the US work that has to go to Australia or Europe to be overhauled.)   
 
Trent 800s will be around for a while, and AA is going to be flying the TrentXWB also. I fully expect TAESL to do the TrentXWB. Also American just got a fleet of brand new Airbus A330-200s that have Trent 700 engines. While that market is going to be very limited, they could look at doing that engine in house. I know HA also has Trent 700s on their 330s.
hell Rolls may still try to get TAESL to do Trent 1000s. Delta does CF34s and doesn't fly a single aircraft with that engine type. I am not sure how badly Delta's leaders are willing to fight for the ability to overhaul the T1000s and XWBs. 
 
As for Mexico, Delta simply doesn't have a test cell in the US that will be able to run the T1000, GEnX or TXWB. So a new cell will have to be built. Not only that but PW4000/CF6 work wont go away as fast as Trent 1000s come in. IIRC Delta is going to be doing the Pratt 4000 overhauls for the USAF tanker fleet. So that line will live on long after the Delta 4000s go away. I fully expect it to end up like the CF34 being nothing but a MRO line. (IIRC both UPS and FX have Pratt 4000s on their 767s. I know Delta does the overhauls for them currently) the CF6 will go away as the Delta and MRO work start to dry up, but that still isn't enough room for both the T1000 and the TrentXWB. 
 
So if Mexico works like they say for the airframe stuff, Delta will have plenty of time to figure out how costly the work is and how good a job they do. Assuming its a homerun like Richard is thinking, you have to expect they will at least look at the idea of building a new cell in the cheaper labor environment instead of trying to figure out where and how they can add a new cell and more floor space here. (and its likely the building costs would also be cheaper in Mexico vs Atlanta)
   
Then all they have to do is tell the sheep....i mean employees they aren't losing any jobs to mexico and boom. The new engines are done in Mexico. Overtime the PW4000s/CF34 lives on MRO money, the CFM56 stays around, the 2037s and 219s hang around but slowly get replaced by the CFM engines. The CF6 line slows down and they just do away with spots as people retire, then it shuts down. the IAE work that is done in MSP then gets moved to the old CF6 and the MSP Engine shop and Test cell get shut down....
 
look at the synergies!! Not only does Delta get the MRO benefit, they can stay with two engine shops. Overtime as next gen narrow body engines come into play they can expand mexico even more. And it could very well play out like that.
 
so no, right now they aren't going to do it....5 years from now? remember, DWH wasn't closing "right now" Tampa wasn't closing "right now" Overhauls weren't leaving "right now" contractors weren't coming in "right now". that "right now" is good for the second they say it, but it doesn't mean anything a second after it is said. The current leaders dismantled the Northwest maintenance organization. 
 
I honestly believe that, outside of the bulk of the NW people that are running Delta now deciding to leave, they will slowly shift Delta TechOps to Mexico piece by piece tell they get a union in here and they ship it all off because its what UA,US and WN have done. Snowball effect and all of that.
 
 
having said all of that, I hope they build a new test cell in Atlanta and do all the next generation widebody and narrow body engines here. 
I simply don't expect it to happen. Its been a fun ride guys. 
 

Question for Dawg...AF just choose the GE engine for their 787. I wonder if that will influence DL's choice.The inherited orders for 787's were for the dash 8 model one that DL has said they do not want. How common is the GE next gen engine to the GE 90?

none. What AF/KL does (or VS or GOL or AM or VX or AZ) will have very little to do with what Delta does. 
 
Had AA goes T1000 as i expected, I would fully expect for Delta to go GEnx, but with Delta being the only Trent 1000 carrier in the US, and maybe NA as i believe both AM and AC are going GE on the 787, I simply don't see GE being able to match an offer from Rollers. In other words, I fully expect Rolls to damn near take a loss to keep Delta a Trent 1000 airline. 
 
Again, a mixed fleet is very possible, because GE and Delta are very close, but a full GE fleet seems highly unlikely. 
 
As to the 787-8. Delta didn't want the frames NW had on order, as the first 20 or 25 787s are heavy. They have a good bit of parts that were suspose to be plastic that are made from aluminum. So Delta pushed the order back. They will end up taking all three types of 787 though and the 9 and 10 are simply to big to replace all of the 763 fleet. Some routes, ATL-GIG for example, will be able to take the extra capacity of the larger frame, ATL-STR, LAX-HND, SEA-HND are good examples of routes that are just to thin for the 789 and would be better of replaced with a 788. 
 
i expect about 20 to 30 8s, 40 to 50 9s, and 20 -10s. I figure 20ish 77Ws or A350-1000s. 
 
Later on in life the A350-900 will make a good 777-232ER and A330-200 replacement. The 777-8 is the only current model that will be able to replace the 777-232LRs, but Airbus may offer a A350-900R that would be able to replace the 77Ls. 
 
 
finally, the GEnX and the GE90, is a very good question that I can not answer other than, if Delta were to bring both engines in-house the 90s and nXs would have separate overhaul lines. I wouldn't think they have to much in common, but I am sure that they have something in common.

 

[topDawg]

I too think DL will go for some 777-300ER's as Boeing will offer them a great deal to keep the line moving. Also, DL seems more price conscience, thus the 717 deal and the hunt for MD-90's. I think they are smart in not limiying their decisions solely on fuel burn.
The initial outlay of cash for replacement aircraft also has to be factored in along with fuel costs. Kind of like people who trade a paid off car in good condition for one that gets maybe 4 to 5 more miles per gallon but now have a 5 to 6 year car payment along with higher taxes. Not too smart of a move financially speaking.

I believe this will be looked at, but I am not sure if Boeing will be able to pull it off. 
 
As i have said before, the issues with the GE90 is a big reason why they has order went to Airbus vs Boeing. 

 

[700UW]

PMUS utilizes power by the hour.

 

[WorldTraveler]

I believe this will be looked at, but I am not sure if Boeing will be able to pull it off. 
 
As i have said before, the issues with the GE90 is a big reason why they has order went to Airbus vs Boeing. 

 
precisely ... and if DL can sway RR to move its MRO business to DL and from AA, the fruits are even larger.
 
You aren't the first DL person who has said that DL isn't fond of the GE engines... one right next to the gate I was at had the engine open... the RR Trents not so much.

 

[700UW]

Funny the CFM56 which is a GE product along with SCENMA is one of the most reliable engines, and gee, doesnt DL have them on ALL their 737s?
 
And US has had the longest on-wing GE CF-6 on the 767.

 

[WorldTraveler]

and surprisingly, it's not the same engine as the GE90.

 

[Glenn Quagmire]

Funny the CFM56 which is a GE product along with SCENMA is one of the most reliable engines, and gee, doesnt DL have them on ALL their 737s?
 
And US has had the longest on-wing GE CF-6 on the 767.

It is "SNECMA" not SCENMA.

Snecma used to be an acronym for Société nationale d'études et de construction de moteurs d'aviation (in English, "National Company for the Design and Construction of Aviation Engines") until 27 Aprilth 2004.

 

[700UW]

Sorry Typo.

CFMI is the name of the JV.

 

[WorldTraveler]

Sorry Typo.

...27 Aprilth 2004.

 

[Kev3188]

... one right next to the gate I was at had the engine open... the RR Trents not so much.

You have a chance to swing down to the ready room and chat everyone up?

 

[metopower]

Yet to have one problem with the GE 90. Can't say the same about the RR 211. Most of us that fly both definitely have a preference.

 

[topDawg]

 
precisely ... and if DL can sway RR to move its MRO business to DL and from AA, the fruits are even larger.
 
You aren't the first DL person who has said that DL isn't fond of the GE engines... one right next to the gate I was at had the engine open... the RR Trents not so much.

Its not the GE engine, Delta loves the CF34, CF6 and CFM56. 
 
Matter of fact the V2500 is a little bit of a better engine for the A321, even then Delta is going with the CFM56-5B engines and a the relationship with CFM/GE is a big reason why. (has a little lower fuel burn IIRC)
 
again, DL isn't going to break up TAESL. As we have seen with Rolls and the XWB/T1000 they are having a hard time getting airlines to buy in because they are wanting everyone to go with the RR TotalCare program. (this is why they just lost the AF order)
I would bet anything that TAESL is the preferred overhaul center for TrentXWB. (regardless of what Delta does) 
 
Also, as i said, Delta is going to have to be willing to invest a ton of capital into the engine shop in Atlanta. More work space, more tooling, new tooling along with a brand new test cell will be required for Delta to do any of the nextgen big engines in house. (GEnx, Trent1000, TrentXWB, the new A330 engines from at least Rolls, the GE9X) the cells in Atlanta have a hard time and have required modification just to be able to run the CF6/PW4000 effectively. (and the GEnx/T1000s would be in the 70K to 75K lbs IIRC, TrentXWB up the 95kishlbs.) And a big question is what I said before, Will the current Delta leadership fight for MRO rights and invest the capital in Atlanta to get these Engines done in house. So far they have yet to show that they are are willing to invest large sums of cash anywhere but Mexico. (don't believe me? go walk in TOCI or TOCII when its raining.) 
 
The MSP cell is also unable to handle anything more than ~65,000lbs also. 
 
I just don't see Rolls willing to invest into all of that when they already can run any Trent engine or RB211 (or the new Trent 700 for the A330NEO) in AFW. 
 
It is possible Delta would be able to swing the Trent 1000 MRO ability just so Rolls can have a NA airline, but the XWB, while Rolls does seem more willing to let airlines do the work in house, is going to be hard to take away from American when they already have the facilitates, and IMO will end up with more engines than Delta will. I don't see it being anything the current leaders of Delta really fight for. I fully expect power by the hour honestly. 

Funny the CFM56 which is a GE product along with SCENMA is one of the most reliable engines, and gee, doesnt DL have them on ALL their 737s?
 
And US has had the longest on-wing GE CF-6 on the 767.

The CFM56 is nothing like a GE90. 
 
Delta is very happy with the CFM56 (both the -5 and -7 for the 737 and A320) and the CF6s for the 767s. 
heck the company like the CF34s TechOps overhauls. 
 
the GE90 is a big buggy and has limited places for it to be overhauled. (AF is the only airline MRO IIRC). This jacks up prices on an overhaul that is already very costly and is a bit of a pain to transport that big ass engine half way across the world. 
 

Yet to have one problem with the GE 90. Can't say the same about the RR 211. Most of us that fly both definitely have a preference.

but which GE90? If its not the big GE90, so the 110 or 115 you wont see an issue. So if you are flying on United the an issue wouldn't be a problem. While the GE90-94B is a GE90, it is not the same engine as the 110/115B engine.
 
The 110s have had gearbox and Tubine issues. 
Matter of fact GE contracted some on wing work, IIRC gear box changes, to Delta TechOps because GE didn't have room to do them. the GE90 engines at Delta are, IIRC, full power by the hour and for the most part are taken care of by GE.