In an interesting news twist, Asia’s largest carrier agreed to purchase 110 Boeing airplanes, yet the market appeared more interested in the cost of one used plane. The news bits continued a spate over the last several months regarding a glut in the airplane market and specifically the wide-body jets. See my original research on the issue here.
The suggestion that the market is oversupplied with aircraft is naturally a negative for Boeing. With the stock flat to down this year, Boeing approved another large-scale buyback and dividend hike to take advantage of the massive order book. Is this story anything other than an airline looking for a discount on planes?
For some reason, Delta Air Lines took to apparently every media outlet that would listen to gloat over purchasing a 777-200 airplane for only $7.7 million. The following tweet capped off the promotion of this feat.
The news follows the Q3 earnings call in October were Delta’s CEO went on the offensive to proclaim a bubble in the 777-200s that were approaching 10-years old. Richard Anderson proclaimed the ability to buy planes at a fraction of the original cost at a suggested price of $10 million.
The original news was bizarre because it is rare for an business man to proclaim to the world of this great deal that might attract a bidding war. Even more interesting is the apparent fact that nobody else wants the wide-body planes that aren’t in high demand these days due to a market shift towards narrow-body airplanes.
The news though smacks of inconsistent with market demands with China Southern Airlines ordering 110 Boeing jets at a listed value of $10 billion. The airline though purchased several versions of the narrow-body 737. With the expected travel growth in China, the country is forecast to need to add considerably to fleets.