Delta Air Lines Inc. (DAL) announced in a statement Thursday that it has chosen Airbus SE (EADSY) for its $12.7 billion order for 100 A321neo narrow-body jets. The decision marks a major win for the European jet manufacturer over Chicago-based Boeing Co. (BA), whose new 737 plane, the Max 10, competes with the Airbus model. (See also: Boeing Flies Toward Double-Digit Growth: Jefferies.)
“This is the right transaction at the right time for our customers, our employees, and our shareholders,” said Delta Chief Executive Officer Ed Bastian.
Delta says it will begin taking deliveries of the single-aisle planes in early 2020 and that the transaction includes options for an additional 100 aircraft. They will replace Delta’s 1990s-vintage McDonnell Douglas MD-90 jets and its older Boeing 757 and Airbus A320 aircrafts.
Boeing Vs. Bombardier
The deal comes as Delta is in the middle of a drawn-out trade dispute between Boeing and Canadian aircraft company Bombardier. The American jet maker has accused its North American competitor of selling its narrow-body C Series planes to Delta below the cost of production. After making its case to the U.S. Commerce Department, Boeing convinced the agency to order a 300% duty on the new Canadian planes.
The Atlanta-based airline has chosen United Technologies Corp. (UTX) unit Pratt & Whitney as a supplier for the engines to power the revitalized fleet. The news comes as a relief for the company after a series of manufacturing issues, delivery setbacks and technical issues with its turbine.
Boeing has seen its shares gain a whopping 88.8% year-to-date (YTD) versus the S&P 500’s 18.5% increase over the same period, driven by investor confidence over increase demand for its aircraft and improved productivity. By comparison, Airbus has jumped 53.6% in 2017. (See also: Boeing to Boost Dividend Next Month: Wells Fargo.)