Delta Air Lines: How New Efficient Aircraft Will Boost Results In The Future (Part 3)

| About: Delta Air (DAL)
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Summary

Fuel efficient wide body aircraft will boost profit.

A330neo can be used to replace A330ceo as well.

Part commonality with A330ceo will lower costs.

In this series of articles I am focusing on the Delta Air Lines (NYSE:DAL) fleet renewal and how this might boost profit.

Since there will be a few replacements I will also make a few comparisons:

  1. Part 1: Boeing 747-400 versus the Airbus A350-900
  2. Part 2: Boeing 767-300ER(NYSE:W) versus the Airbus A330-900neo
  3. Part 3: Airbus A330-300 versus the Airbus A330-900neo (subject of this article)

In this article I will deal with the improvements that the Airbus A330-300 compared to the Airbus A330-900neo. Although the Airbus A330-900neo has not been ordered to replace the Airbus A330-300 it can certainly be used as a replacement on the longer routes.

In this analysis I will consider a flight from Atlanta to Amsterdam, which has a trip distance of 3819 nm. The route is flown daily, assuming no changes to the schedule the flight is operated 365 times per year.

The ticket prices are as follows:

Business class: $8613.60

Economy Comfort: $3229.60

Economy Class: $3229.60

Table 3 shows the configuration used for the calculations.

Table 3: Configuration used for the calculations

For these calculations I have used the Airbus A330-900neo the way Airbus has been marketing it: A more efficient aircraft with 10 more revenue generating seats.

Figure 9: Effect of changing from the Airbus A330-300 to the Airbus A330-900neo (Source: Dhierin-Perkash Bechai)

As can be seen the increase in weight is compensated for by increased efficiency and higher capacity.

Per flight the change from the Airbus A330-300 to the Airbus A330-900neo means the following:

Figure 7: Effect of changing from the Airbus A330-300 to the Airbus A330-900neo for the financials (Source: Dhierin-Perkash Bechai)

Profit is mainly driven by higher revenue and lower fuel costs. Although revenue increases only 3% in terms of absolute values it is still the bigger contributor to the increase in profit.

Fuel costs per seat-mile are $0.048 for the Airbus A330-300xeo versus $0.042 for the Airbus A330-900neo.

This shows that on the longer routes the Airbus A330-900neo can certainly be used as a replacement for the Airbus A330-300.

Conclusion for the entire series of articles

  • In all 3 comparisons the newly bought aircraft end up on top as was to be expected
  • The Boeing 747-400 will be replaced by the smaller Airbus A350-900, which allows for an increase in frequency that subsequently will boost revenue and profit
  • The Boeing 767-300ER will be replaced by the bigger Airbus A330-900neo, the capacity increase as well and better efficiency will boost revenue and profit
  • With the order for 50 fuel efficient wide bodies Delta assured itself of solid revenue and profit growth

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.