AV Analysis Week 32
This week, our Data Analyst, Paul Saupé looks at Delta Air Lines’ fleet, paying particular attention to values, developments and activity, following the release of their 2Q23 SEC filings covering the period from April start to June end.
Delta Air Lines, a leading global airline, is headquartered in Atlanta, Georgia, United States of America. They were founded in 1925 as Huff Daland Dusters and became Delta Air Service in 1928. Since 1934, they have been known as Delta Air Lines. Today, they operate out of many key hubs, notably Hartsfield-Jackson Atlanta Airport. The world’s largest airport as confirmed by the Federal Aviation Administration’s Preliminary CY2022 Commercial Service Airports for passenger numbers issued 22 June 2023.
In their 2Q23 financial results, Delta announced that they have delivered their highest quarterly revenue and profitability ever, with a record operating revenue of USD 14.6 bn. An increase of 19 percent on 2Q22 financial results. Delta expects their third quarter total revenue to follow 2Q23 results and be up between 11 and 14 percent compared to 3Q22.
Recent Fleet Developments
Delta operates a vast fleet of Narrowbody and Widebody passenger aircraft, which comprise a combination of old and new tech aircraft.
As a consequence of Covid-19 and restrictions on air travel, Delta Air Lines exited fleets such as their remaining McDonnell Douglas MD-88 and MD-90, as well as Boeing 737-700, 777-200ER and 777-200LR. There were also exits of some Boeing 717 and 767-300ER aircraft. Prior to this, Delta had been transitioning its fleet, particularly with Airbus A220-100, A330-900, and A350-900, aircraft. As well as backlogs for those aircraft, it also retained significant backlogs for the Airbus A220-300 and A321neo. In 2022, they added a new type to their backlog, ordering 100 737 MAX 10 aircraft with an option for 30 more.
From 2025, Delta is expecting to incorporate the 737 MAX 10, however, the aircraft is still not certified, and there have been numerous delays incurred due to various production and quality issues with the already delivered 737 MAX 8 and MAX 9 fleet. Further, following the MAX grounding by worldwide authorities, the Aircraft Certification Reform and Accountability Act passed in 2020 means that certifying an aircraft is more stringent and time consuming. Boeing has documented that it aims to certify the 737 MAX 10 in 2024, but given what has come before, this date could be pushed back.
As can be seen in the following chart, the most notable single fleet growth for a new tech aircraft has come in their A321neo fleet. Increasing from 3 aircraft in May 2022 to 39 aircraft as of 4th August 2023. For old tech, we have also seen its existing fleet of 737-900ERs increase by 15 aircraft in 2022 and again BY 17 in 2023, giving them a total of 163 aircraft as of the 4th of August 2023. All additional 737-900ER aircraft formerly operated within the Lion Air Group are used aircraft additions.
In the table below AviationValues show the top 10 airframes operated by Delta Air Lines by Market Value. Collectively, with a total value of 8.83 bn the 737-900ER and A321ceo fleets make up a substantial portion of the total fleet value at 42% of the overall fleet. This is primarily due to Delta having 163 Boeing 737-900ERs and 127 A321ceos. Secondary to fleet size, their fleet of Airbus A321ceos has an average age of 4.60 years, and 737-900ER 7.58 years. Delta’s most valuable Widebody is the A350-900 with a typical 5 year old being valued by AviationValues automated valuation model of 90.73 USD mil, it is not surprising that they shadow the other Widebodies in the fleet. The aircraft has an average age of 4.67 years and a combined Market Value of 2.84 USD bn.
Looking at Delta’s top 10 airframes and the percentage share of flights they have had in the first 7 months, year on year we see some variances dating from pre Covid-19 to post. AviationValues shows that pre Covid-19, the 737-900ER was the aircraft performing the highest percentage of flights. However, since 2021 this has been surpassed by their A321ceo fleet. Although Delta has grown their new technology fleet, their old tech aircraft are still a dominant force and are responsible for the majority of their flight activity. New Technology aircraft will slowly take up the lions share of activity as supply chain issues resolve, production rates continue to grow and their considerable backlog is fulfilled.
Note: Data as of August 2023 includes live aircraft only based on those operated by Delta Air Lines.
Although Delta Air Lines has been adding new tech aircraft, it has also been adding some old tech aircraft with Boeing 737-900ERs as discussed, as well ex Volotea Airlines Boeing 717s. There have not been any significant fleet exits to speak of, nor are there any significant plans to exit old tech fleets, other than a 2020 announcement to exit 717s by 2025.
With continued deliveries of A321neo and A220-300 aircraft, and eventually the 737 MAX 10, AviationValues expects that some of Delta Air Lines’ oldest aircraft, such as those A320ceo aircraft incorporated following the Northwest Airlines merger, Boeing 717, 757-200, and 767-300ER, will gradually be phased out. As at 4th August 2023, AviationValues counts 79 aircraft in Delta Air Lines’ fleet that are over 30 years old.
It is not only Delta Air Lines that is retaining and adding old tech aircraft, and we have witnessed a flurry of activity in 2023 especially in Narrowbody markets. Market Value trends for such aircraft have been positive, and AviationValues’ daily updated values, and deals database provides users with a key advantage: the availability of the most up to date historical to current value trends, and the latest transactions of both Narrowbody and Widebody aircraft, whenever they need it. By ensuring our users have the most current information at their fingertips whenever it’s required, we enable them to make better, more informed decisions. Get in touch with us today.
Data as of August 2023.
Disclaimer: The purpose of this blog is to provide general information and not to provide advice or guidance in relation to particular circumstances. Readers should not make decisions in reliance on any statement or opinion contained in this blog.
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