If US Airways buys Delta, what would it mean for Boeing?
An $8 billion hostile bid by US Airways to take over rival Delta Air Lines, which likely would create the world's largest carrier, could have long-term consequences for The Boeing Co.
Delta is one of Boeing's best U.S. customers and is expected to order Boeing's new 787 Dreamliner.
US Airways is a key North American carrier for Airbus and has already ordered the Airbus A350, which will compete against the Dreamliner. In exchange for that 20-plane deal, Airbus agreed to invest in US Airways. Both the 787 and A350 are twin-aisle jets.
''The deal could raise the stakes between Boeing and Airbus for twin-aisle sales as we assumed Delta would be a natural customer for the 787," Byron Callan of the Prudential Equity Group said in a research note to clients.
Airbus has not yet gotten the OK from its parent, EADS, to go ahead and start development of the A350. Even if that approval is given soon, as expected, it will be at least 2013 or 2014 before the A350 would be ready to enter airline service. Boeing's 787 will begin airline service in 2008, but because of demand for the jet, Boeing does not have delivery positions available until 2013 for new customers.
Delta is in federal bankruptcy protection and is not inclined to accept US Airways' offer. Delta's goal, said CEO Gerald Grinstein, ''has always been to emerge from bankruptcy in the first half of 2007 as a strong, stand-alone carrier.''
Industry experts said the takeover bid faces significant hurdles.
US Airways, which previously emerged from bankruptcy and then acquired America West in 2005, is still integrating those two operations. In fact, it has not yet painted the airline's new logo on many of the America West jets. Making a move on Delta would only add to these integration complexities, industry experts noted.
A merger would generate $1.65 billion in annual savings and benefits, US Airways said. But timing is critical. More than half the savings would be lost once Delta has emerged from bankruptcy, according to US Airways.
US Airways said the merger would reduce capacity by 10 percent. Combined, the two airlines operate more than 1,200 planes, including nearly 500 regional jets.
In the 1990s, Delta, American and Continental signed deals to buy only Boeing jets for 20 years. Those deals had to be reworked before the European Commission approved the 1997 merger between Boeing and McDonnell Douglas.
US Airways was once a big Boeing customer, too. But in 1996, Boeing sued the airline when it refused to accept delivery of eight Boeing jets. US Airways has not bought Boeing planes since.
For its single-aisle fleet, Delta operates Boeing's newer 737-800, older planes from McDonnell Douglas and more than 100 Boeing 757s.
Delta's widebody fleet consists of Boeing 767s, as well as eight 777s. Boeing's Web site shows that Delta has 50 more 737-800 jets on order, along with five more 777s.
Along with a growing number of single-aisle Airbus planes, US Airways still operates older Boeing 737s, as well as 757s and 767s. In addition to its order for the A350, US Airways has another 37 Airbus single-aisle jets on order for delivery between 2008 and 2010.
US Airways did not identify which planes it might shed should the merger with Delta be completed. But the airline did say it could operate a mixed fleet of Boeing and Airbus jets.
But combining the fleets would present an ''interesting challenge," a spokesman for US Airways said.
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