Airbus faces setback as Delta reviews $14 billion jet order

Bloomberg

Airbus SE’s expansion into Boeing Co.’s home market faces a potential setback as Delta Air Lines Inc. reviews a $14 billion purchase of the European planemaker’s two newest wide-body models.
The Atlanta-based carrier, known as an influential and shrewd aircraft buyer, is studying its twin-aisle orders amid signs the long-range travel market is saturated, Ed Bastian, Delta’s chief executive officer, said.
“We continue to see excess capacity in wide-bodies as we look to the future for the industry,” Bastian said, adding that Delta, which has orders for the Airbus A350 and A330neo, is in discussions with planemakers.”
Word of the review intensifies concerns that demand for long-haul planes is weakening as a long jet-buying binge draws to close. American Airlines last year deferred its A350 order, while United Continental Holdings Inc. said it may swap its A350 purchase for smaller planes.

Wide-Body Worry
“It definitely contributes to what’s been a building caution, or wall of worry around the wide-body market,” said Ken Herbert, an aerospace analyst at Canaccord Genuity. Airbus confirmed that it is in touch with Delta, while declining to go into detail.
The Toulouse, France-based company out-dueled Boeing for Delta’s 50-jet order in 2014 and is slated to begin delivering the first of 25 A350s later this year. They’re intended to replace the Boeing 747 jumbos that once shuttled Delta’s passengers to Asia. The airline has also ordered 25 A330neos, a model that’s yet to fly, as a replacement for its oldest Boeing 767s.
American last year delayed its A350 deliveries by an average 26 months and is due to take the first of 22 planes next year, spokesman Joshua Freed said. The planes were ordered
by US Airways Group, which merged with American in 2013. United said last year it was
reviewing its purchase of A350-1000s.
Delta, too, could defer orders to a schedule that better fits its demand forecasts, or shift the mix to other models, according to aviation consultant Scott Hamilton. The carrier may issue a request for proposals for single-aisle aircraft that would pit Boeing’s 737 Max against Airbus’s A321neo and will also need a mid-market planes, such as the lighter-weight regional A330 or the so-called 797 under consideration at Boeing, he said by email.
In December, Delta scrapped a longstanding order for 18 Boeing 787 Dreamliners that it inherited in its 2008 merger with Northwest Airlines. The airline said then that the decision was consistent with the need “to prudently
address our wide-body aircraft needs.”