Delta Tech Ops 5-year goal to double revenues

#MROAM

Ed Bastian, Delta Air Lines CEO.

April 9, 2019, © Leeham News: Delta Air Lines has the third largest third-party MRO company in North America and aggressively seeks to grow, in sharp contrast to its competitors.

While American and United airlines have limited their own maintenance, repair and overhaul, let alone seek third party business, Delta Tech Ops is a business unit and profit center. Delta CEO Ed Bastian said today that Tech Ops will achieve $1bn in revenues this year and has a goal of $2bn within five years.

Bastian was the lead-off speaker at the Aviation Week MRO Americas conference in Atlanta this week.

Tying MRO to orders

Delta, like a few other airline companies in Europe, is well known within the industry for tying MRO services for Tech Ops to aircraft orders.

Delta’s 2016 order for 75 Bombardier C Series (now the Airbus A220) required an MRO agreement with engine maker Pratt & Whitney for Tech Ops to be North America’s MRO center for the GTF engine powering the C Series.

When Delta ran a competition between the Airbus A321neo and the Boeing 7337-10, the deciding factor was PW’s continued willingness to extend the MRO agreement to the GTFs on the A321neo; CFM’s offer was not as expansive.

Bastian, at the Aviation Week conference, said Tech Ops also entered into broad agreements with Rolls-Royce to provide MRO services for the Trent family of engines. Rolls powers the Airbus A350 already in Delta’s fleet and the Airbus A330neo that will be delivered soon.

Tech Ops also has become an MRO provider for the Trent 1000 used on the Boeing 787 and which is the basis for the Trent 7000 on the A330neo. Rolls has been scrambling to service the Trent 1000 due to blade failures that resulted in months-long grounding of as many as 50 787s.

Bastian also said Tech Ops is expanding its engine testing cells, the first such expansion in the US in about 25 years.

Strong interest in NMA

Bastian has publicly supported launch by Boeing of the New Midmarket Airplane (NMA) and reiterated his support today. But he ducked every question for details of what Delta wants in the airplane, falling back on a general, previous statement that he doesn’t want to see it “overbuilt.” By this, he means, too much range or too much structure.

The NMA is commonly defined as a 225-270 passenger family of two airplanes with ranges of 5,000nm and 4,500nm respectively. With about 200 Boeing 757s and 767s in need of replacement over the next decade, Bastian wants to see Boeing move forward. But, he said, the company is “distracted” now with the two fatal accidents involving the 737 MAX and its subsequent grounding.

16 Comments on “Delta Tech Ops 5-year goal to double revenues

  1. I find it hard to believe the deciding factor between the 737-10 and the A321NEO was the engine.

    The fact the A321 is a better aircraft would be a higher multiplier in how Delta functions than a limited MRO on CFM.

    Keeping in mind its only the LEAP involved and they have the CFM-56 engine which will be around for a long time.

    It may make for good marketing hype and future leverage but I don’t believe it and of itself is the over the top factor.

    The reality is Delta has been shifting Airbus way for a while now. And that is fine, they feel their Aircraft suite Delta needs better.

    • @TW, you can find it hard to believe all you want. All other things were about equal; the engine MRO was the deciding factor.

      • Fair enough, my experience with Corporate pronouncement is they are a shade of truth and sometimes not at all.

        I assume they did not take the 787 because they could not get the MRO for the GenX or RR engines then as well.

      • I don’t doubt that the MRO contract was key. But DL management is highly tuned to their Net Promoter Score (NPS) from passenger surveys.

        From what I have gleaned, Delta saw a big improvement in NPS on routes that have picked up the A321. Sure some of that is ‘new plane smell’, so to speak, but DL has invested in lots of cabin upgrades for older aircraft, and most passengers are notoriously unaware of what type of plane they are in.
        But they seem to respond and like the Airbus, as reflected in aggregate NPS.

        I may be overstating it, but I thought I saw in one of the Delta News items (or an interview) back when DL expanded their 321 orders, that NPS improvement played at least some part. As a frequent DL pax, I definitely prefer the 321 over the 739 (though I have absolutely full confidence in both as far as safety).

          • I had a 4.5 hour holiday trip with TUIfly 737-800 and Eurowings A320 back home. According to Seatguru with same seat pitch. I felt much more cramped in inside the 737-800. Maybe Eurowings has better seats. It was far more easy to position my legs relaxed in A320.

          • I flew 737 on two different Airlines on a trip.

            One was cramped (AK Airlines) and the other I think was American was fine.

            Seat setup has a lot to do with it.

            Despite wide shoulder my issue is pitch and I am average height.

        • I am the opposite, I despise their a321 interior layout. They have too many aisle exits and awkward restroom arrangements that I can never find a seat I like that reclines and isn’t nearly next to a restroom. Likewise the tiny windows make me feel claustrophobic. Probably my least favorite though is the new bins on their new deliveries (not the refurb 319/320). They look like they should be “bags on their side” like all the rest of the fleet, but every person tries this and finds they’re too short. This means the 321 is the longest boarding process in history. I’ve had no issue on their 739s, their 319s feel a little cramped but are ok (minus the heinous rear lab setup) and my favorite is their 752s. The layout makes them feel extremely spacious. On a short trip I don’t care what plane but a longer trip I actively avoid the 321s. I feel the NPS would go up because they’re usually on time and refurbing the fleet more than anything. On any redone plane be it an Airbus or Boeing the planes appear new and well kept vs a few years ago when they looked dated. During the refurb process I was traveling transcon nearly every week and the difference was night and day, I always got happy when I stepped aboard and noticed the new bins.

    • Lots of DAL routes can be covered with the 737-10 and its economy on those routes is hard to beat. The A321neo is “more of aircraft” and can be used with a bit more payload/range, as DAL already has a good batch of A321ceo’s and will get more can make sense to standardize on the A321neo.
      DAL also have an even bigger fleet of 737NG’s that could have been rolled over to 737-10’s. Boeing playing hard ball regarding DAL A220 orders and the PWA engine MRO offer most likely tipped the scale and the fact that DAL has the money to pay for the A321neo’s (some say buying a Mercedes instead of a push rod Chevy). The MRO volume for the PW1100G will be pretty huge and not that much competition as on the LEAP MRO business.

        • Yes, but I think there are 2 different tool sets, test cell equipment, very few common partnumbers. The A220 has not yet had the MD-80 type of market impact. In comparison with cars, the A220 is the Porsche, the ERJ190 the Audi, the MRJ190 the Lexus, the C919 the Dong Feng, the ATR72-600 the VW Golf., the CRJ900 the Willys Jeep.. So the A220 must either be sold for a “Porsche” price of be transformed into a BMW then a VW Passat to get the volume sales.

          • “In Asia Pacific, IHI Corporation in Japan, based close to Tokyo, is currently overhauling the GTF for the A320neo family. Eagle Services Asia, in Singapore, an $85 million joint venture with Singapore Airlines Engineering, comes on line in December to handle the GTF on A320s. Another two new facilities with GTF capabilities will be with Delta TechOps in Atlanta and Engine Maintenance Europe (EME) Aero in Jasionka, Poland.”
            https://australianaviation.com.au/2019/01/fantastic-beasts-the-pratt-and-whitneys-gtf-engine/

  2. I remember the big talk at this time was the Boeing appeal to the US Government to slap a 300% tariff on the Bombardier CSeries planes that Delta had ordered. Everyone thought this order was going to Airbus because of that. But like anything else, big deals like this can be multi-faceted.

    • Smart businesses don’t short change controls changes.

      There is a world of difference in smart and we got taken to the cleaners and a lot of businesses have to look at that on the 737.

      You may be stuck with your current fleet but not down the road and it might be best to have both A and B in the fleet mix.

      Commonality is wonderful until it isn’t.

  3. The insistence of Delta to connect MRO to ordering a new plane, shows the limitations on Boeing’s planned new business model (on NMA) of making (more) money on services rather than selling planes.

    I don’t see Delta, Lufthansa, Singapore Air etc making a large order on a plane they don’t get MRO on.

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