Delta Air Lines Inc. nearly joined its rivals in purchasing the ill-fated Boeing 737 Max jet, an aircraft model grounded worldwide in March after two deadly crashes that killed nearly 350 people.
Delta CEO Ed Bastian explained the 737 Max is a "good product" and "very competitive" during the airline's second-quarter earnings call on July 11. But the company ultimately opted for the Airbus A321neo after conducting a "comprehensive review" that looked at the cost, the engine, customers' reviews of the aircraft, and other factors, he said.
"It was a close call," Bastian said. "We spent quite a few months analyzing and going back and forth."
Earlier this year, Ethiopian Airlines was flying a Boeing 737 Max from Addis Ababa, Ethiopia, to Nairobi, Kenya, when it crashed soon after taking off, killing all 157 people on board. The incident came just months after a Lion Air flight of the same model took off from Jakarta, Indonesia, and crashed, killing all 189 passengers.
The manufacturer has been under scrutiny over what it knew about software problems with the 737 Max, its bestselling jet.
There have been reports the anti-stall system in Boeing 737 Max planes made it difficult for pilots to control the aircraft.
In early May, the company admitted an important safety feature on the plane did not work as intended and that it knew of the problem as early as 2017. Boeing (NYSE: BA) also said the issue was not communicated to airlines or to the U.S. Federal Aviation Administration until after the crash in Indonesia.
There is no current timetable of when the Boeing 737 Max will return to service. The FAA is waiting for formal submission of a software fix from Boeing.
The Boeing Co.'s crisis has turned into a huge international scandal, and has been broadly bad for the entire aviation industry.
But Delta's Bastian has publicly stood by Boeing through its struggle, and vouched for the aviation giant multiple times.
Bastian has said in several interviews he has confidence that whatever the problem is, Boeing will solve it.
“Sixty percent of our airplanes that we fly are Boeing,” Bastian said at Recode's 2019 Code Conference in Scottsdale, Ariz., on June 11. “Boeing has been the most successful aviation company in the world.”
Delta's main competitors — American, United and Southwest — have been hit the hardest by the 737 Max's grounding.
American Airlines (Nasdaq: AAL), Southwest Airlines (NYSE: LUV) and United Airlines (Nasdaq: UAL) have canceled thousands of flights throughout the busy summer travel period and removed the 737 Max from their schedules until further notice.
The three airlines have a total of 72 Max jets across their combined fleets, and have lost out on hundreds of millions of dollars since its grounding.
The Atlanta-based airline picked up some of the slack after reporting record adjusted revenues and profits in the second quarter, but claims the 737 Max grounding had only a small impact on its results.
"We do not fly the Max, and clearly, there was a benefit for the airline in the quarter. I don’t think there was a significant benefit," Bastian said on the call. "Certainly, it’s not explaining the results we’re seeing."
Bastian has refused to speculate about how competitors could return the aircraft to service without struggling financially. However, he recognizes that it will be challenging to reintroduce the aircraft.
"It's clear that Max has been a real — it's had a dramatic impact on our industry," he said on the call. "I think the reintroduction, when the time comes, is going to have to be carefully managed, no question."
Delta (NYSE: DAL) doesn't plan to add any Max aircraft to its fleet even if they're sold at a lower price.
"We feel comfortable with our existing order book," Delta's Chief Financial Officer Paul Jacobson said on the call.
