Delta expected to announce order for roughly 100 Airbus planes, a loss for rival Boeing

Key Points
  • The order is for some 100 Airbus A321neo planes.
  • The announcement would come amid an international trade dispute between rivals Boeing and Bombardier.
  • Boeing has complained to the Trump administration that Bombardier allegedly sold planes to Delta below the cost of production and received subsidies.
Delta-Airbus order value exceeds $12.7 billion

Delta Air Lines is set to announce an order for 100 Airbus A321neo jets, CNBC has learned.

The order, which is expected to be announced by the airline Thursday, ahead of its investor day presentation, is a big win for Airbus and a very public loss at home for its main rival Boeing. The U.S. airplane manufacturer was hoping to land an order for 100 of its 737 MAX planes. Delta is currently in the middle of a trade dispute between Boeing and its Canadian rival Bombardier over an earlier airplane order.

The book value of the Airbus order would exceed $12.7 billion, though manufacturers routinely extend airlines discounts when they buy new planes.

At least some of the planes will be outfitted with Pratt & Whitney engines, according to a person familiar with the matter.

Delta and Boeing declined to comment. Airbus didn't immediately return requests for comment. Some airplane purchases can fall apart at the last minute.

Trade dispute

The purchase from France-based Airbus comes as Delta appears to be growing more distant from Boeing amid an intense trade dispute.

Boeing had complained to the Trump administration that Canadian airplane manufacturer Bombardier sold narrow-body C-Series jets to Delta below market prices and received unfair government subsidies. The U.S. Commerce Department sided with Boeing in the dispute over Bombardier's planes and recommended a duty of 300 percent on the some 100-seat C Series aircraft.

Delta has repeatedly said it would not pay the tariffs on the the plane and said Boeing's offer was for used planes. In a surprise move in October, Airbus swooped in and said it would take a majority stake in Bombardier's C Series program.

Word of Delta's Airbus order was reported earlier by CNN.

Delta's planes are 17 years old on average and its decision on new single-aisle jets was highly anticipated.

In the midst of the dispute over the Bombardier C-Series planes in October, Delta CEO Ed Bastian told reporters that it hasn't ruled out purchasing aircraft from Boeing even though the company launched a complaint over the deal.

"Yes, we will be taking more Boeing aircraft," he said.

Samuel Engel, head of the aviation practice at consulting firm ICF said it may not be game over for Boeing.

"It's a loss to Boeing if you think it's a trend but if it's just one data point, there's still room for more orders," he said. "The question is: 'What's the next order?'"

Big order book

Boeing shares rose 0.7 percent in late afternoon trade Wednesday, little changed after the news of the Delta order broke. The company announced an $18 billion buyback and raised its dividend by 20 percent earlier this week, adding fuel to its 2017 rally. Shares are up more than 87 percent so far this year.

The aircraft manufacturer has a robust order book with 661 net orders in 2018, most of them for single-aisle 737s.

Boeing has a "very healthy balance sheet and production rate outlook," said Richard Aboulafia, vice president at aerospace and defense analysis firm Teal Group.

Correction: An earlier version of this article misstated the location of Boeing's headquarters.

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