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Reuters: A Look at Delta Air Lines Fleet and Buying Nine MD-90s

By David Parker Brown at Airline Reporter

Thu Mar 10, 2011 1:30pm EST

Delta Air Lines MD-90 (N908DA) in older livery with Mt. Rainier in the background.

Delta Air Lines has a very diverse fleet of aircraft. Delta currently flies the Boeing 737-700 and -800, the Airbus A319 and A329, the DC-9, MD-88 and has been adding additional MD-90s — which all compete with each other. A while back Delta announced they would be replacing their older DC-9s with newer aircraft and at first I assumed it might be with Boeing 737s and Airbus A320s in a move to simplify their fleet by getting rid of the entire DC-9/MD-80 family, but it looks like they are going to upgrade it. Why would Delta buy MD-90s instead of Boeing 737s or Airbus A320s? I think there are a few reasons.

The biggest is cost. To pick up a Boeing 737 or Airbus A320 it is going to cost a heck of a lot more than purchasing a used MD-90. Yes, Delta will have to pay to re-do the interiors and the planes won’t be as fuel efficient as a brand new model, but the over all costs will still remain lower. Delta has a huge maintenance facility in Atlanta and would most likely continue to work on DC-9/MD-80 aircraft from other airlines, even if they got rid of their own fleet.

The MD-90s allows Delta to back fill the DC-9s and save additional time before completing an entire fleet renewal program. Delta just announced buying nine MD-90s from Japan Airlines (JAL) and they hope to find more in the future. Delta’s President Ed Bastian stated at a December investor presentation that Delta hopes to purchase about 50 MD-90 aircraft over the next two years.

Since Delta is looking to get so many MD-90 aircraft, could it make sense to purchase some Boeing 717s which are based off the MD-90? Maybe. Recently Southwest purchased AirTran, which has over 85 Boeing 717s. Currently, Southwest only has a fleet of Boeing 737s, it could be possibly they would want to be rid of the 717s. The problem is that Southwest is locked into a contract with Boeing for the aircraft and it is unlikely Boeing would want to let them out. If Delta plans to purchase a significant amount of new Boeing aircraft in the future, it could be negotiated to let Southwest out of their contract early (with Southwest’s approval, of course), allowing Delta to take control of the 717s.

“The MD-90 is a cost-effective aircraft that helps us more efficiently maintain our flying levels as we retire regional jets and DC-9s, so the additions won’t increase our capacity.” Delta spokesperson Trebor Banstetter told AirlineReporter.com. “We’ll continue to look for opportunities to acquire used MD-90s in the future as we retire DC-9s and smaller jets.”

Either way, I like the ‘ol MD-80 maddog family. I hear so many people complain about the aircraft and sure if you are sitting in the back by the engines, they can be a bit annoying. However, I love that 2-3 layout and the sound of their engines at full throttle during takeoff. I am glad to see an American airline will be keeping the maddog alive for years to come.

Image: Jeremy Dwyer-Lindgren

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Seattle PI: A Good Move? Delta Buys 9 MD-90s

This past Thursday, Delta Air Lines confirmed their plans to purchase 9 used Boeing MD-90 aircraft from Japan Air Lines (JAL) to replace the airline’s aging DC-9. Deliveries are expected to begin in January 2012 following an interior refurbishment.
Japan Airlines International McDonnell Douglas...

According to Bloomberg, Delta’s vice president of fleet strategy, Nat Pieper, wrote employees in an internal website, Delta will “continue to look for opportunities to acquire used MD-90s.” As of December, according to the airline’s annual report, Delta operated 19 MD-90s.

If you have followed Delta’s fleet acquisitions over the past few years, you’ll note that the carrier has developed a liking for the MD-90. In early 2010, Delta reached a deal with China Eastern Airlines for 9 MD-90s. The aircraft went into service during the months of February through July. There is also speculation (maybe confirmation?) that Delta has a lease agreement with SAS for a few MD-90 aircraft.

Is this a smart move? You bet! Delta’s CEO, Richard Anderson, cites the aircraft’s economics and lowly capital costs (compared to a Boeing 737-800) that make it a great option. Let’s compare, shall we?

Delta currently operates 34 DC-9-50s, which were inherited from Northwest Airlines, and has quite a few of the smaller DC-9 variants in storage. The DC-9-50s seat 125 people (16 in first, 109 in economy) and are powered by two Pratt & Whitney JT8D turbofans. Meanwhile, the 160 seat MD-90-30s sport two much more efficient IAE V2525-D5 engines.

JAL’s MD-90s were built throughout 1996-1998, while the aged DC-9-50s Delta currently operates were built between the mid-1970′s through the early 1980′s. That’s roughly a two decade gap in technology. FTB: ha, not probably as much as they think.

Yet let’s go back to the engines. Although the IAE V2500 series engines are available for the A320 series (Delta operates 319s and 320s), the carrier uses CFM56s on their A320 fleet and the IAE V2500 is only on Delta’s acquired MD-90s. Therefore, from a maintenance perspective (and A/Ps, please correct me if I’m wrong), it’s surprising that Delta would adopt this aircraft when no other airplane in their fleet utilizes IAE engines. While I’m not an expert on engines, I’m confident the benefits of this airplane still outweigh the cons to keeping the older DC-9s, as those 1960′s JT8Ds are fuel burners.

How about pricing? The Bloomberg article cites Douglas Runte, managing director at Piper Jaffray & Co. in New York, who follows aircraft transactions, for a price estimate. “MD-90s have appraised values of $5 million to $9 million, depending on vintage, and it is highly unlikely that Delta would be paying more than that range for the Japan Airlines aircraft.” As JAL is restructuring its fleet, there is a strong desire to improve efficiency (hence all the recent route cuts / aircraft retirements). I would agree with Mr. Runte that Delta got a good deal for JAL’s MD-90-30s.

If Delta is buying these used MD-90-30s for the aforementioned $5 million to $9 million, their getting quite a bargain for their buck considering what they’re paying Boeing for the 737-800. The 737-800 also seats 160 people, but costs 8 to 16 times more, depending on what Delta’s paying for the 737 and what they paid for the MD-90.

Overall, as I mentioned earlier, picking up MD-90s right and left is a great move for Delta. Sure, the Boeing 737-800 is newer and more efficient than the MD-90, yet the economics of the MD-90 can’t be too far off from the 737, given its equal seating and efficient IAE engines. It will be interesting to watch and see if Delta can happily take more MD-90s off other carriers hands in the future to continue growing their MD-90 fleet.

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