Delta to spend $1B on service, fuel efficiency

Jan 25 2010 - 8:43pm

ATLANTA -- Delta Air Lines Inc. will invest $1 billion over the next three-and-a-half years to improve customer service, remodel existing aircraft and improve fuel efficiency instead of buying new planes like some of its competitors.

Even those airlines scheduled to add new aircraft in the next few years could slow down the pace of deliveries if the economy takes a turn for the worse and air travel does not pick up. Fuel prices also have risen in recent months, adding to the uncertainty.

Delta, the world's biggest airline, said Monday it will spend roughly $300 million per year through mid-2013 to add more entertainment options in coach cabins, lie-flat seats for international premium customers, airport VIP lounges and other customer service enhancements.

Some of the money will also go to improving fuel efficiency.

Delta, based in Atlanta, said that rather than invest in new aircraft, it wants to spend money to improve the consistency of services offered to different groups of customers. The airline is taking delivery of only four new aircraft this year, according to a spokesman, who said Delta's plans beyond 2010 will be disclosed later.

In contrast, United Airlines said in December that it was ordering 50 new airplanes with list prices totaling more than $10 billion. The unit of UAL Corp., based in Chicago, won't take any deliveries of the planes until 2016. It also has extensive rights to defer the orders.

American Airlines plans to take delivery of 45 new Boeing 737s this year as part of its effort to replace some of its aging aircraft. The unit of AMR Corp., based in Fort Worth, Texas, took delivery of 31 new 737s in 2009. It has said it will commit to eight more deliveries in 2011.

Both United and American also have made customer service improvements in recent years. United said in October 2007 that it would spend nearly $4 billion over the next five years on improvements for both customers and employees aimed at producing revenue and efficiency. American has refurbished aircraft interiors and upgraded business class seats on international flights.

Delta said it will complete the modification of 269 pre-merger Northwest Airlines aircraft to feature Delta's blue leather seats, updated lighting and increased overhead bin space, as well as other amenities.

Delta also will install winglets -- vertical stabilizing fins projecting from tips of aircraft wings -- on more than 170 Boeing 767-300ER, 757-200 and 737-800 aircraft to extend aircraft range and improve fuel efficiency by as much as 5 percent.

Delta President Ed Bastian said the airline's investment in improvements to existing aircraft is within the level of capital spending Delta has historically laid out.

Delta, which bought Northwest in October 2008, is scheduled to release fourth-quarter and full-year 2009 financial results on Tuesday. It is expected to post a loss for the fourth quarter and for 2009.

 

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