WorldTraveler said:
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.
metopower said:
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.
