Delta CEO Ed Bastian announced on Thursday that the airline will permanently retire its Boeing 777 fleet by the end of the year. According to Bastian, the decision was made due to the drop in travel demand caused by the coronavirus (COVID-19) pandemic. Following the retirement of its 18 777s, Delta’s long-haul routes will be flown exclusively by the company’s A330s and A350-900s. The airline previously announced plans to accelerate retirement of its MD-88s and MD-90s to June 2020.
“Our principal financial goal for 2020 is to reduce our cash burn to zero by the end of the year, which will mean, for the next two to three years, a smaller network, fleet and operation in response to substantially reduced customer demand,” Bastian said in a memo to employees. “An important tool to help us achieve these goals is retiring older aircraft and modernizing our fleet as we plan for the future.”
Delta has more than 650 aircraft parked due to the pandemic and resultant economic slowdown. The airline reported that more than 41,000 employees have taken voluntary leaves of absence and customer refunds amounting to over $1.2 billion have been issued since the crisis began. Bastian noted that Delta is currently burning about $50 million a day.
Bad news for Boeing. Sounds like Delta will be moving to an Airbus-centric fleet in the future. By the time this pandemic is over, the aircraft boneyard in Arizona will be pretty full.
The used airliner market will be interesting. I am sure, now that Delta has set this precedence, many more airlines will be publicly announcing what they have been privately planning for some weeks now, a slew of airliner retirements. It certainly sets the table for what the legacy carriers are preparing for in their passenger load predictions for the next 2-3 years.
This certainly does not help Boeing either losing the parts/maintenance support business because of Delta’s 777 fleet retirement. I am sure there will be a bunch of Boeing 777/767/757/747/737 retirements soon to be announced. It will be interesting to see what the results will be for both Boeing and Airbus as the airlines “thin their herds”.
Looks like a great opportunity for the Federal Government to expand Davis-Monthan and provide retired airliner long term parking and storage for a fee and get a few bucks back from the Airline Bailout Program (ABP…I just wanted to invent another acronym…aviation thrives on them…just doing my part). The airliner pickling business will be the next aviation “boom” venue.
APB, airline pickling business; prepping for storage until passenger traffic rises to bring them out again. Replace or charge batteries, change oil and filters, check tire pressures and flat spots, grease fittings, dust off the gauges, upload new updates, etc before firing then up. Oh and hang a few pine scented cards or spray Febreze. If no one drinks disinfectant, cleaning the food service area. Then begin the very long preflight.
That made me chuckle Fred 🙂
Jim:
DM is the boneyard for DOD and government owned aircraft only. (Took a couple there after VN) No civilian or airline storage. There is one few miles up I-10 at the Army NG facility, but not very large; mostly 74s.
4,000 acre Kingman Muni (which smelted ~6000 WW2 fighters and bombers into 57 million pounds of aluminum ingots in 18 months after WW2) has stored some Delta already and immediately could handle 100 more@$250/month fee. Roswell, NM has room. The D-M boneyard is 100%military and cannot expand beyond because development surrounds it. Pinal Airpark Up I-10 al 1500acres is dismantling some Delta 767 and holds their 747 fleet
I was with 355TFW@D-M when they got the first active duty A10 and pilots hated being assigned to it: mocking it as slow and ugly when they’d trained for supersonic dog fights with Russians. Now they compete for a seat as it is the best at killing bad guys in 2020…and getting them back home (sometimes on manual reversion).
Ironically some Arab Wars Wounded Warthogs returned home to Tucson and AMARG to be dismantled for parts, arriving on “stretchers” within C-5s. The fleet keeps shrinking because politicos let Fairchild bulldoze their Long Island factory for big real estate bucks [to become a Chuck E. Cheese strip mall] just as the craven politicians within SUNY a few years later secretly tried to close and dismantle their nearby FRG collegiate flightline and sell off buildings, planes, and parts to the private sector after 9/11, then retaliated against those who exposed and stopped them.
PS Specifically 615 WW2 fighters, 54 light bombers, 266 medium bombers and 4,463 heavy bombers were sliced and smelted just at Kingman within 18 months producing 57 million pounds of postwar pots and pans.
PPS I deliberately bought a home on Irvington Road with a south facing picture window looking out at MASDC/AMARG. Visitors asked “how can you stand to look at a junkyard?” It was an open air aviation museum to me…with constantly changing exhibits.
THE question for Boeing AND for Airbus:
When demand rebounds, will the airlines want new, fuel-efficient planes, or will they elect to return already-depreciated (paid-for) fuel-guzzlers into service? If fuel stays cheap, that latter option may be very attractive.
Any way you look at this, the demand for ANY new airliners likely will be anemic, for years to come.
Boeing AND Airbus EACH have an on-paper backlog of about 5,000 planes. Under extant and evolving circumstances, how many of those 10,000 airplanes ever will get built/delivered?
When demand returns, thin routes likely will dominate the landscape. Will that make the 777X – technically, still in development – the perfect plane for a market that no longer exists?
What the emerging market likely will need/want is a family of aircraft that can replace both the 757 AND the 737. This means that, perhaps counter-intuitively, NOW is the time to design the long-awaited 797.
In a risk-averse world, run by bean-counters, what are the chances?
Agree, counter-intuitively, the low-point in the economy is the ideal time to develop ‘the next best thing’, as by the time it comes to market, the economy is on the upswing and your shiny cutting-edge product is ready to cash-in.
“THE question for Boeing AND for Airbus:
When demand rebounds, will the airlines want new, fuel-efficient planes, or will they elect to return already-depreciated (paid-for) fuel-guzzlers into service? If fuel stays cheap, that latter option may be very attractive.”
Rebound? I’m not so sure about that. This virus has changed the way people will live. The world has been shut down long enough for people to assess priorities and rearrange life style in ways that would not have been possible otherwise. The affects are just beginning to be felt. Some changes will be short term, some long term and some permanent. I’d be running lean, light and ready to adapt as required at a moments notice.
I see the same thing as well. Just gauging from people around me, no one is excited about going back to work, even less back to normal. It sounds as if people tasted quality of life and work from home. Hard to make them go back unless an economic disaster happens next, which most likely will.
I think we will always fly but more business. Companies will always want us to fly. I have a backlog on international flights waiting for the end of the pandemic. As to personal flying, that is where the crunch will be. People will want more affordable flying with more comfort. Seeing airline business models onw and how they never were able to do in the past, it will be a point of contention for years to come.
I suspect we will see consolidations as we always do in times of crisis. A low-cost airline will emerge, maybe Norwegian, and have a solid business model that turns a profit. The bigger airlines will fight with more comfort without lowering their prices at first and eventually create low-cost subsidiaries to compete. Now, where have I seen this before? 🙂
For years Delta declined to update their legacy aircraft to be ADS-B compliant. Now, with the clock running on their 5-year ADS-B grace period, it will be difficult, and expensive, to return most of these airframes to service. I’m skeptical they will fly again in US airspace.
Yes, this is THE time to begin work in earnest on the 797. But I doubt Boeing can marshal the capital required in the foreseeable future.
I was was working for McDonnell Douglas on the MD80’s back in 1986 when it was announced over the loud speakers that we got the contract from Delta for a number of these planes which put everybody in good spirits, now all my hard work is going to the desert, Geez I must be getting old, 🙁
I don’t understand the belief that there will not be a rebound in travel within a year, maybe even by the end of this year. As for ‘fuel guzzlers’, I thought the 777 already had the latest new generation NON-guzzler engines.
It does, but it’s too big for thin routes.
I think a lot of people will be thinking similar to the way I do. And from my point of view, until there’s a vaccine or viable treatment available for Covid-19, the last thing I’m going to do is strap myself inside a metal tube, inches away from and actually touching at times, multiple strangers who’ve been doing the same with multiple other strangers, for hours on end, breathing the same air that they are coughing and sneezing into.
Well, it certainly had the most efficient engines twenty-five years ago (one of the choices being the GE90.) But the 777X will have the GE9X, which is newer and more efficient. Hopefully someone will actually buy some of the planes; I’m working on the GE9X type certification project, which is just about to hatch.
When you buy a ticket and have a choice, you need to decide if you want to shift dollars and jobs to Europe where they’ll never be seen again or do you want to keep them here where they’ll support your job, your neighbor’s job and your country.
Sad to see Delta taking the bailout funds of American taxpayers, turning their backs, and supporting Europe.
On the one hand, they have to do the expedient things to survive. On the other hand despite the xenophobic overtones, if we have learned anything from this whole mess with China, we now know we need to keep as much manufacturing as possible domestic.
It’s China now Kevin, but if you remember it was Japan back in the 60’s & 70’s. Manufacturers will shift production to wherever they can find the cheapest labor. Some are already shifting away from China and into Vietnam, Cambodia and Indonesia. And we have ourselves to blame to a good degree. When we run across town to buy an item that is on sale for a buck fifty cheaper than the store you would otherwise shop at, we reinforce to the corporations selling those items that they need to reduce costs continually in order to continue increasing their sales. It’s a nasty cycle.
Yeah; I love to buy the best of something (car, motorcycle, tools, guitars, guns, etc.) if I know I’m gonna keep it. For a one-time job, I’m off to Harbor Freight.
There are certain critical items (such as PPEs, WRMs, etc.) that need to have a fixed manufacturing base in the USA, and if possible, more than one, widely separated.
Travel will come back. Maybe the business world will shift and continue to make good use of virtual presence, but nobody wants their kids to watch a video tour of Disneyland or Yellowstone. They want to go there.
Travel by air is curtailed as businesses wrestle with their bottom lines and industry wonders when the next shoe drops. If and when a vaccine comes around to inoculate the world against this contagion, our new normal forces everyone to think outside the box.
Fuel, particularly Jet-A will be cheap because it is and will be plentiful. Even more so for the next 2-3 years for the airline industry. No one could have foreseen an entire industry, dependent on Jet-A, go from record flight miles, high fuel usage/consumption, consistent and high load factors, to literally “zero”.
While so many people clamor for back to 2019 normalcy in all aspects of life including business, especially aviation for the airplane nuts known to frequent these pages, no none has nor anticipated a start up of both life and airline travel business from almost “zero” at the same time. With all the reverberations through out the aviation supply chain that also is sitting at idle, somebody will have to fly something with load factors high enough to at least break even, sometime. That means that enough of the public will have to feel comfortable enough with their health, wallet, job, or long term unemployment compensation with check in hand, deciding I am confident enough of my health, the other passengers health, and my finances to place a reservation and eventually get on board an airliner. That’s a lot of decision-making.
There is no algorithm, computer model, or business precedence that will be able to guide the bean counters, CEO, business leadership in general, in making those first steps. And every decision will have to made with the nagging notion in the back of the mind, what if we do this too soon, and round two potentially happens? Or, if we do this too late, watching their company go bankrupt because no cash flow. Bankruptcy will be a tenuous option when there are no viable buyers because everyone is in the same boat at the same time for the same reason.
I don’t see a post Covid-19 lifestyle. I see a “new normal” with Covid-19 that really has no definition right now. Instead, the immediate future is filled with unknowns making it very difficult to make future business predictions, present business decisions, let alone dealing with personal health, passenger and employee safety.
Covid-19 is proving to be a test of leadership quality in all aspects of life. We will see what the airline’s, Boeing, and Airbus leadership is all about. Plus, we are going to find out how good our individual and collective decision-making will be. Covid-19 has eliminated fence straddling indecision in just about anything and everything.
Exactly Jim. I couldn’t even come close to articulating what you just have as well as you have. This world wide shut down has set things in motion that no one has even dreamt of yet much less thought of. There isn’t a business in the world that will not forever have in the back of their head, “what if,” “what if it happens again?” Literally any excuse can now be used to shut down economies under the guise of “it’s in the best interest of the general populace.” The psychological impact of this shutdown is not even fathomable. As my next door neighbor would say, “ we be up feces creek without a paddle.” Well, not exactly those words.
You can pretty well bet money the environmental movement’s eye’s lit up when they began to see how this shutdown started to impact the environment. They (the environmental movement) could never in their wildest dreams have dreamt of such a tool just falling into their laps. It will happen again.
Worth-little prediction:
The NEXT time this happens, we will NOT destroy the world’s economy because of it.
Despite mankind’s collective stupidity, we actually DO learn from our errors.