Delta Air Lines CEO Richard Anderson told (03-Jun-2013) the IATA annual general meeting in Cape Town that the carrier does not see a need to order more aircraft although its current order book is only approximately 100 aircraft. “We think the world has changed now ... We think we are big enough to not get in line and will be opportunistic buyers of small lots at a time,” Mr Anderson says. He believes about one third of orders end up being cancelled and that the best aircraft deals involve relatively new second hand aircraft. “We see residual value go straight down on relatively new airplanes and we find that quite attractive,” Mr Anderson says.
IATA AGM 2013: Delta plans to be opportunistic buyer of aircraft
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Aeromexico and Delta JV: major uncertainty reigns after the DoT hits hard with slot divestitures
A transborder joint venture between SkyTeam partners Aeromexico and Delta is hanging in the balance now that the US DoT has required slot divestitures and other stipulations in order for the airlines to move forward with their proposed business agreement. Not surprisingly, Aeromexico and Delta believe limitations proposed by US regulators would diminish the economic benefits of the joint venture, and are warning they are reconsidering deepening their business ties.
Numerous airlines expressed concerns about Aeromexico and Delta’s concentration of slots at Mexico City Juarez, and the DoT responded by requiring slot divestitures at the airport along with the relinquishment of slots at New York JFK. The airlines have countered that the DoT’s analysis is flawed, and that a smaller number of slot divestitures at Juarez required by Mexico’s government should allay any concerns expressed by competitors. Aeromexico and Delta also argue another stipulation imposed by US regulators – limiting the joint venture to a five-year term – would create too much uncertainty for the viability of the business venture.
Delta’s plans to take its stake in Aeromexico up to 49% was contingent on the JV proposal succeeding. But with the stipulations imposed by DoT in order for the partners to establish their joint venture a dark cloud of uncertainty is hovering over Aeromexico’s future ownership structure.
United Airlines Part 2: Sustaining balance sheet strength while declaring ambitious margin targets
One area where United Airlines has made important strides during the last few years is in overhauling its balance sheet. Its efforts have gained some recognition from credit agencies for its progress in paring down debt and improving leverage ratios; but similarly to its rival American Airlines – attaining an investment-grade credit rating is not a huge priority for United. The airline believes it can achieve some benefits that investment-grade companies enjoy with the current state of its balance sheet.
In order to sustain the progress it has made in balance sheet repair United plans to amend its aircraft order book to slash capex commitments during the next couple of years, including the deferral of 61 Boeing narrowbodies. United is hinting that other fleet changes could be under consideration, including deals similar to the agreement it forged during 2015 to lease used Airbus A319s.
This is Part 2 in a two-part series reviewing United’s financial and revenue-generating opportunities.