Delta Air Lines, Inc. (NYSE:DAL) Pilot Deal Clears Path For Embraer SA (ADR) (NYSE:ERJ) $4 Billion 737 Jets

Delta Air Lines, Inc. (NYSE:DAL) approved a tentative deal with its pilot in line with its plan to purchase 737-900ER jets from Boeing Co (NYSE:BA) at $4 billion.

The deal with the pilots will allow the addition of smaller jets from Embraer SA (ADR) (NYSE:ERJ). The order for the Boeing jets will bring Delta’s total plane count for the same model to 140 according to a statement that the company released. Delta plans to introduce the Jets as a replacement for the company’s narrower airplanes that will be put out to pasture in 2019.

The Boeing 737-900ER has a carrying capacity of 180 passengers. Delta’s expanded deal will pave the way for the acquisition of 20 Embraer E190s jets from Boeing. The Embraer jets were previously owned by another airline company based in California according to the Statement. They will be absorbed into the service towards the end of 2016, where they will be used in the domestic flight schedules.

Delta’s Embraer jets purchase is part of the company’s strategy to transfer from the current 50-seater regional jets that are not fuel efficient. The bigger planes have more carrying capacity and are also more fuel efficient. This will increase Delta’s profitability. Additionally, Delta pilots are well equipped to fly them. Thus, the airline company will not have to outsource pilots to the regional lights.

Delta’s Pilot union had a meeting in the middle of the week to discuss the matter. The union heads approved the tentative deal that included a guarantee that they would let Delta add the Embraer Jets to the fleet.

The agreement will let Delta Air Lines, Inc. (NYSE:DAL) introduce about 25 additional regional jets that can carry up to 70 or 76 passengers. For every 2 E90s, Delta will be able to send out one new passenger plane. Boeing’s share listing received a 1% boost to $142.96 in New York while Delta dropped by 0.6% to $40.80. Embraer did not experience a significant change. Therefore, its value remained at 23.45.

About the Author

Michael joined US Markets Daily in 2009 and is a national news reporter focusing on economic issues, data analysis and the financial health of state and local governments.

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