NEW YORK (Reuters) - Delta Air Lines DAL.N said on Thursday it will place a firm order for 100 Airbus AIR.PA A321neo jets and an optional order for 100 of the aircraft.
Delta, the No. 2 U.S. airline by passenger traffic, said in a filing with the U.S. Securities and Exchange Commission that it expects deliveries to begin in the first quarter of 2020, with new aircraft arriving through 2023.
CNN and Reuters reported yesterday that Airbus had beaten out rival Boeing Co BA.N for the order, boosting Airbus' leading share of the market for narrowbody models, while highlighting the increasingly fraught relationship between Delta and Chicago-based Boeing.
The two U.S. companies' relationship began to fray in October when Boeing successfully lobbied the U.S. Commerce Department to propose trade duties of nearly 300 percent on Delta's order of CSeries jets from Canada's Bombardier Inc BBDb.TO.
The carrier declined to say whether the disagreement between the two planemakers had any effect on its decision to go with Airbus.
“This is the right transaction at the right time for our customers, our employees and our shareholders,” Chief Executive Ed Bastian said in a statement.
Delta's decision also gives lift to United Technologies UTX.N subsidiary Pratt & Whitney, which the carrier said had won the contract for the engines that will power the A321neo aircraft.
In the same SEC filing, Delta also said it now expects operating margin of 11 percent for the fourth quarter, compared with the 11 percent to 13 percent it had previously forecast Delta Air Lines’ shares were up 2.9 percent at $55.21 in afternoon trading.
European industry officials hailed the jet order as an endorsement of Airbus’s presence in the United States, where it opened an assembly plant in Mobile, Alabama, in 2015, in the hopes of further penetrating the U.S. market.
That plant is at the center of the Boeing-Bombardier trade dispute since it is where the Canadian company plans to assemble jets for Delta under the CSeries airliner program, which has since been acquired by Airbus.
Delta’s order is expected to involve discounts of well over 50 percent from the $12.7 billion catalog value, an aircraft market source said.
CFM International, a French-American engine venture that lost out to Pratt & Whitney, suggested the pricing was aggressive.
"The financial terms reached a level that simply were not in the best interest of our shareholders," the company, co-owned by General Electric GE.N and Safran SAF.PA, said in a statement.
Reporting by Alana Wise in New York, Rachit Vats in Bangalore and Tim Hepher in Paris; Editing by Chizu Nomiyama and Steve Orlofsky
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