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Delta’s flag-waving meets its match in market realities

Reuters/Toru Hanai
Dawn’s early flight.
  • David Yanofsky
By David Yanofsky

Editor of code, visuals, and data

Published Last updated This article is more than 2 years old.

US airline Delta is placing an order for 50 wide-body planes with the European consortium Airbus. The deal would be worth $13 billion for Airbus if Delta was paying list price (typically, such deals are discounted) for the 25 A350 and 25 A330 aircraft the airline says it needs to replace its aging American made Boeing 747 and 767 aircraft.

Besides its size, the deal is interesting because it seems to contradict Delta CEO Richard Anderson’s championing of American jobs. At a Congressional hearing in June 2014, Anderson painted Delta as a model American company, with a huge American workforce proudly flying many American-made airplanes, operating American-made engines. (Delta currently operates 424 US-made Boeing aircraft, and 158 from Airbus.)

Anderson testified that the US’s Export-Import bank was killing American jobs—in this case, the jobs of Delta employees—and needed to be reformed. He cited a $1 billion Ex-Im bank loan to Air India, arguing it “drove us out” of the US-India market, and cost Delta 1,000 jobs. (The bank denied this.) “We currently have 100 Boeing planes on order, with GE engines,” Anderson said, to “put our discussions here in context.”

So why is Anderson now buying European, rather than American, aircraft? Because patriotism is no match for market realities.

It wasn’t a matter of cost: the list price for similar Boeings would also have come to roughly $13 billion. But, as Boeing said in an emailed statement to Quartz, it has a record backlog of orders, and was unable to meet Delta’s scheduling requirements. So Anderson took advantage of an opportunity: In June, the Dubai airline Emirates canceled an order for 70 A350s, opening slots in Airbus’s delivery schedule that Delta was able to grab.

Delta says patriotism has nothing to do with it, “Boeing and Airbus compete on a level playing field for U.S. customers.”

Getting the planes faster is a better deal for Delta, and its shareholders. Boeing’s big backlog of orders may mean no American jobs were hurt in the making of the Delta-Airbus deal.

As for Anderson’s chest-thumping patriotism… Well, the new Delta aircraft will have the American flag on them.

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