Delta Renews Fleet With Major CSeries Order and A321 Top-up

 - April 28, 2016, 1:45 PM
Atlanta-based Delta Air Lines will be the U.S. launch customer of the CS100 as well as the largest CSeries customer. (Image: Bombardier)

[Updated on April 29 to include news on new A321 order]

Delta Air Lines this week launched a major fleet expansion and modernization plan. On April 28, the U.S. carrier placed an order for up to 125 Bombardier CS100 narrowbody airliners, and then a day later it signed a contract with Airbus for 37 more A321s. The CSeries order, valued at $5.6 billion at list price, is the largest in Bombardier Commercial Aircraft history. The Canadian airframer hailed it as a “major endorsement” of the challenged CSeries program.

“Today is a defining moment and a strategic marker for the CSeries aircraft program,” said Fred Cromer, Bombardier Commercial Aircraft president, during a ceremony at the company’s Mirabel, Quebec manufacturing facility.

The agreement includes a firm order for 75 CS100s with options for an additional 50 aircraft. Delta may elect to convert a number of airliners into longer CS300s at a later date, Bombardier said. The Atlanta-based carrier will be the U.S. launch airline of the 110-seat CS100 as well as Bombardier’s largest CSeries customer. Deliveries are scheduled to begin in the spring of 2018.

Bombardier now has 318 firm orders for CSeries airliners. Launch customer Swiss International Airlines expects to begin service with the CS100 on July 15.

Delta’s order comes six months after the province of Quebec agreed to infuse $1 billion in the financially strapped CSeries program, giving it a 49.5-percent stake in a limited partnership with Bombardier. “Today’s announcement is further proof that we made the right decision in choosing to support Bombardier, even in times of turbulence,” said Martin Coiteux, Quebec minister of municipal affairs for the Montreal region.  

Releasing its first quarter financial results on the same day of the announcement, Bombardier said it will record an “onerous contract” charge of $500 million in the second quarter related to the Delta order and another order from Air Canada. The manufacturer remains in talks with the federal government for further investment, said president and CEO Alain Bellemare.

“The Quebec government support came at a great time and it helped us increase confidence with our customers, provided additional financial flexibility in a very competitive environment and also helped us to unleash the full value of this great aircraft,” Bellemare said at a press conference following the signing ceremony. “I would say that we have been in discussion with the federal [government] for many months; so far we haven’t found the right solution.”

Also speaking at the event in Mirabel, Delta CEO Ed Bastian acknowledged “an element of some skepticism” preceded the airline’s order, but added that the CS100’s operating economics, including a promised 20-percent improvement in fuel efficiency, swayed its decision. Asked about that remark during the press conference, Bastian said the geared turbofan design of the aircraft’s Pratt & Whitney PurePower PW1500G engine provided an opportunity to “change the game” for fuel efficiency and operating effectiveness.

“We’ve been studying the technical attributes of the aircraft for many years,” Bastian said. “With the amount of development and innovation coupled with the pricing and economics that we were able to bring to bear, it changed our mind.”

The C Series order establishes the model as a legitimate challenger to the Boeing 737 Max 7 and Airbus A319neo, neither of which has managed to gain nearly the market traction their larger siblings have enjoyed. While Delta uses the C Series to replace regional jets and its smallest aging narrobodies, an order it placed Friday for 37 more A321s illustrates a clear distinction in roles between the largest Airbus narrowbody and Bombardier’s 110- to 125-seat CS100. With the latest contract, Delta now holds orders for 82 A321s, most of which Delta plans to use to replace its fleet of 116 MD-88s. Delta expects to take delivery of the 37 current-generation A321s, the acquisition of which comes during the end of the model’s production cycle, concurrently with A321s from previous orders through 2019.

The airline took delivery of its first A321 in March, and has scheduled its inaugural revenue flight for May 2 between Atlanta and Orlando, Florida. It joins 126 A320-family aircraft, all powered by CFM56 turbofans, already flying in the fleet.