Delta delays US$5b of jet deliveries in blow to Airbus

[ATLANTA] Delta Air Lines is delaying US$5 billion in aircraft deliveries until after 2022, dealing a blow to Airbus as the US carrier braces for years of weak travel demand.

The deferral agreement includes about US$2 billion in planes that were scheduled to be handed over this year, Delta said in a statement Tuesday as it reported worse-than-expected quarterly results. The delays will also affect a small number of CRJ regional jets made by Bombardier, Delta said, without disclosing the total number of aircraft affected.

The revamped delivery schedule will ease cash strains during the next two years as Delta shrinks its operations to contend with the coronavirus pandemic, which has caused an unprecedented collapse in commercial flying. Like other airlines, the Atlanta-based company has already slashed spending by parking planes, cutting flights and thinning its employee ranks in response to the crisis.

"This has less to do with the outlook for demand and more to do with our cash situation," Delta chief executive officer Ed Bastian said in an interview. "It's an indication of a great partnership with Airbus and the recognition that we're playing the long game and are still going to take these aircraft."

The deferrals underscore the pressure on Airbus and rival Boeing to preserve orders even as their customers have little need for new aircraft. Delta is also planning to retire 400 aircraft by 2025, including 200 this year.

Delta is the first major US airline to report third-quarter earnings, setting the tone for an industry that has been slammed by the pandemic. Mr Bastian said Delta wouldn't be able to break even on a cash-flow basis until next year, updating an earlier forecast that the company would reach that milestone by the end of 2020.

BLOOMBERG