Desperate Boeing Giving Unprecedented Deal to Delta On 737 MAXs, But Threatens Not To Build The Planes

Two weeks ago I wrote that Delta Was on the verge of placing a Boeing order for 100 737 MAX 10 aircraft. That order is expected to come this week at the Farnborough Air Show.

Delta has been a sworn enemy of Boeing, going to far as to call them an ‘arms dealer’ to Middle East airlines (after the previous CEO claimed those airlines were complicit in 9/11). Delta has tended to buy Airbus for new planes, but CEO Ed Bastian sees this as a political liability. Both Delta and Boeing are heavily subsidized by U.S. taxpayers.

Airlines usually pay about 50% of list prices for planes so when you see deal values announced, the usual rule of thumb is to cut them in half. In this case however, Delta is probably getting an even better deal.

  • Boeing has threatened to kill the MAX 10 program unless the FAA expedites certification of the aircraft to avoid new safety requirements. A Delta deal shows momentum for the program and helps pressure political leaders.

  • The manufacturer gets a foothold in Delta’s new order book, which it’s struggled for, and that positions them better for future deals.

  • Meanwhile Delta is a notoriously tough negotiator (in a 50-50 deal, Delta takes the hyphen).

  • And this is a plane that still has baggage after the Lion Air and Ethiopian crashes and its extended grounding.

If Delta is buying new Boeing aircraft, it necessarily means they’ve gotten a nearly unprecedented deal on the planes. With Boeing losing numerous orders as a result of delays and groundings, compounded by Russian sanctions and China’s state-controlled carriers going with Airbus narrowbodies, they’re desperate to put better numbers up on the board.

Meanwhile adding these planes to their order book will likely mean making cancellation of the program even less likely and far more costly, so Boeing’s threats to legislators and regulators – already reminiscent of Cleavon Little in Blazing Saddles – ring even more hollow.

Related Posts

Leave a Reply

Your email address will not be published.