Southwest Airlines Co. has confirmed that the company, together with its subsidiary AirTran Airways, Inc., has reached an agreement with Delta Air Lines, Inc., and Boeing Capital Corp. to lease or sublease all 88 of AirTran’s Boeing 717 jets to Delta.
AirTran Airways will transition approximately three Boeing 717 aircraft per month to Delta Air Lines, beginning in August 2013.
“We are pleased to have reached an agreement to transition AirTran’s 717 fleet to Delta,” says Gary Kelly, chairman, president, and chief executive officer of Southwest Airlines. “Replacing 717 flying with 737s is expected to significantly benefit our financial results once the transition is complete, and better supports our strategic and financial goals.”
Adds Kelly: “Obviously, having an all-Boeing 737 fleet improves our scheduling and operating efficiency. This was the best opportunity, far and away, to sublease the Boeing 717 aircraft.”
By reaching this agreement, Southwest Airlines says it will avoid having to convert the AirTran Airways Boeing 717 fleet into Southwest configuration as part of AirTran’s gradual operational integration into the larger carrier.
Southwest says its aircraft rent expense associated with the Boeing 717s will be eliminated as each aircraft is transitioned to Delta Air Lines. Southwest estimates its total estimated AirTran acquisition and integration costs are expected to increase by approximately $50 million as a result of the aircraft transition costs assumed by the company as part of this 717 agreement.
However, Southwest expects its annual pre-tax results to benefit by approximately $200 million, after all 88 Boeing 717s are leased to Delta and replaced with Boeing 737 flying.
Delta is scheduled to take delivery of 16 of the leased Boeing 717s in 2013. An additional 36 will be delivered in 2014, and the remaining 36 in 2015.
The Boeing 717s will primarily replace small 50-seat regional jets on Delta’s network, on a capacity-neutral basis. The 110-seat aircraft will feature new, fully upgraded interiors, with 12 First Class seats, 15 Economy Comfort seats and in-flight Wi-Fi throughout the aircraft.
Seats in economy class will be arranged in a 2-3 configuration with one middle seat per row, as they are configured now in AirTran service.
“Adding the Boeing 717 to our fleet will give customers, particularly business travelers, more mainline aircraft service that features their preferred amenities,” says Delta CEO Richard Anderson. “The 717s also provide Delta with a significant improvement in economic efficiency relative to the aircraft they are replacing.”
The Boeing 717 initiative is the latest step in Delta’s domestic fleet-optimization plan launched in 2010, which has focused on improving the profitability of the company and providing passengers with an improved customer experience.
Delta will begin taking delivery next year of new Boeing 737-900ER jets, which will primarily replace older Boeing 757, Boeing 767 and Airbus A320 aircraft in its massive fleet. Delta will add 100 new 737-900ERs between 2013 and 2018.
In addition, Delta has upgraded its fleet with the addition of more than 80 MD-90s and two-class regional jets, retiring less efficient mainline and regional aircraft.