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Delta orders 100 Airbus jets valued at over $12.7 billion

UPDATED: Thu., Dec. 14, 2017

In this Thursday, Oct. 13, 2016, file photo, a Delta Air Lines sign overlooks the unloading area at Hartsfield-Jackson Atlanta International Airport, in Atlanta. (David Goldman / Associated Press)
In this Thursday, Oct. 13, 2016, file photo, a Delta Air Lines sign overlooks the unloading area at Hartsfield-Jackson Atlanta International Airport, in Atlanta. (David Goldman / Associated Press)
By Michael Sasso Bloomberg

Delta Air Lines ordered 100 of Airbus’s A321neo jetliners, a deal with a list value of $12.7 billion, in a major victory for the European planemaker over Boeing.

Deliveries of the single-aisle planes will begin in early 2020 and the transaction includes options for an additional 100 aircraft, Delta said in a statement Thursday. The airline’s decision dealt a setback to Boeing’s efforts to sell its newest 737 model, the Max 10.

The A321neo is “the best narrow-body product in the sky,” Delta Chief Executive Officer Ed Bastian said in a presentation to investors.

Delta is turning to Airbus to overhaul its short-range fleet three years after placing an order of long-haul jetliners with the European planemaker. In recent months, the No. 2 U.S. airline has been battling Boeing in a trade dispute involving a separate plane, Bombardier’s C Series. The U.S. manufacturer persuaded the Commerce Department to slap 300 percent duties on the new Canadian jet, contending that Bombardier sold it to Delta at well below cost.

The Atlanta-based airline also told investors that passenger revenue for each seat flown a mile would climb about 4 percent in the current quarter, at the high end of a previous forecast. Its operating margin will be about 11 percent, compared with the previous outlook of as much as 13 percent.

The shares climbed 2.8 percent to $55.53 at 11:22 a.m. in New York, the most on a Standard & Poor’s index of five major U.S. airlines.

The carrier’s Airbus jets will be powered by Pratt & Whitney’s geared turbofan engines. That gives the United Technologies Corp. division a boost after a series of manufacturing hurdles, delivery delays and technical glitches with the turbine. Delta will also become a maintenance, repair and overhaul center for the engines.

The A321neos will replace Delta’s 1990s-vintage McDonnell Douglas MD-90 jets, as well as aging Boeing 757 and Airbus A320 aircraft. Delta is expected to use the new planes for domestic flights and shorter international routes. The carrier will outfit Airbus’ longest narrow-body jet with seating for 197 people, including 20 in first class.

The carrier already started refreshing its long-range international fleet in late 2014, selecting 50 Airbus wide-body planes in a deal valued at $14 billion based on list prices.

Delta’s last major Boeing order was for 100 737-900ER jets in 2011, although it has placed add-on orders for more 737s since then.

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