Boston, MA, 04/11/2014 (usastockreport) – Delta Air Lines, Inc. (NYSE:DAL) the oldest airline still operating in the U.S. has recently announced its plans for the purchase of 50 wide body (dual-aisle) jets. Delta is looking to replace its 747-400 and 767-300ER jets, which consume more fuel than the newer models. Delta might also revamp its current fleet of Airbus A330, which Airbus is considering to upgrade with newer engines to reduce the fuel costs.
Delta Air Lines, Inc. (NYSE:DAL) has a policy of buying aircrafts once they have a proven- track record. It is known to keep away from new aircrafts or planes that are under development in order to reduce financial and technical risks. The airline is known to make its purchases for the aircrafts that are nearing the end of their production cycle which allows them to get heavy discounts on list prices.
Billion Dollar deal
The deal is expected to bring multi-billion dollar business for the aircraft makers. The deal is estimated to be worth over $10 billion on list prices. But airlines like Delta Air Lines, Inc. (NYSE:DAL) never buy at list prices and get heavy discounts on bulk purchases. These discounts, which are in the range of 25%, can go up to 60% if the airline makes the purchase from a single aircraft maker.
Fierce battle between Airbus and Boeing to win deal
The prospect of Delta buying a large number of aircrafts has triggered a fierce battle between The Boeing Company (NYSE:BA) and Airbus. The list price for Airbus A330-300 is $245.6 million and would cost around $184 million on a 25% discount. Similarly, the comparable Boeing 777-300ER with a list price of $320 Million would cost $240 million on a similar discount. But even at such discounts, the total deal would be worth more than $12 Billion for Airbus and $16 Billion for Boeing. It remains to be seen how far the aircraft makers can go to win such a big deal.