Delta announced today that it has reached agreement with The Boeing Company to convert five firm orders for Boeing 777-200ER aircraft to longer-range Boeing 777-200LR aircraft (two conversions were previously announced), to order 10 Boeing 737-700 aircraft, and to assume its existing aircraft purchase agreements with Boeing. Delta has agreed to sell, immediately upon delivery, 38 future deliveries of Boeing 737-800 aircraft – 15 to Aviation Capital Group and 23 to Babcock & Brown Aviation Finance Limited. These actions support Delta’s planned international expansion, give it additional flexibility to fly new routes, and complete an important element of its restructuring. These transactions are subject to Bankruptcy Court approval.

“We’ve had a long-standing relationship with Boeing and the addition of these aircraft to Delta’s existing Boeing fleet allows the company to fulfill key elements of its long-term fleet plan, which is vital to Delta’s restructuring and plans to emerge from Chapter 11 in the first half of 2007 as a solid, independent carrier,” said Mel Fauscett, managing director of Fleet Planning and Acquisition for Delta. “These new aircraft are also an important part of Delta’s transformation, enabling Delta to fly customers to more international destinations in greater comfort. We continue to evaluate the needs of our network moving forward and plan to provide more guidance on the fleet when we file our Plan of Reorganization later this month.”

All five of the new 777 aircraft will be delivered with fully horizontal personal sleeper suites in BusinessElite® featuring on-demand in-flight entertainment systems in every suite. Customers flying in Economy class also will enjoy more room and nine-inch personal entertainment screens in every seat back, complementing Delta’s efforts to retrofit its fleet of 777s and more than 100 737-800 and 767-300 aircraft with on-demand, in-seat entertainment at every customer’s seat by the end of 2008.

These transactions with Boeing will introduce the first 737-700 aircraft to Delta’s fleet, replacing 10 future options for Boeing 737-800s with the 737-700. “The 737-700 is a better fit for the current needs of our network, providing flexibility in our fleet to fly longer, thinner domestic routes while at the same time supporting our international expansion to Latin America and the Caribbean,” Fauscett said.

The 737-700 will operate with a common cockpit type to the 71 737-800s in Delta’s fleet, but will be configured with 124 seats vs. the 150-seat 737-800s to serve smaller and developing markets. The 737-700 also will be delivered to Delta with winglets to deliver additional fuel savings and efficiencies.

During the Chapter 11 process, Delta has achieved $400 million of a projected $450 million in fleet savings by entering into agreements for lower lease payments; retiring four older, less-efficient aircraft types; and by rejecting, returning or selling 138 aircraft (as of October 31, 2006). Should these agreements be approved by the Court, Delta’s mainline fleet, order and options will be:

 

 

  Delivery in Calendar Year Ending
Aircraft on Firm order
2007(a,c)
2008(b,c)
2009(b,c)
2010(b,c)
Total
B 737-800
10
7
14
19
50
B 737-700
-
7
3
-
10
B 777-200LR
-
2
3
-
5
Total
10
16
20
19
65

(a) We have a definitive agreement, which was approved by the Bankruptcy Court, with a third party to sell 10 B737-800 aircraft immediately after those aircraft are delivered to us by the manufacturer in 2007.
(b) We have agreements, subject to approval by the Bankruptcy Court, with two separate third parties to sell 38 B737-800 aircraft immediately after those aircraft are delivered to us by the manufacturer - including seven aircraft in 2008, 14 aircraft in 2009 and 17 aircraft in 2010.
(c) These agreements are included in the above table because we continue to have a contractual obligation to purchase these aircraft from the manufacturer.

 
  Delivery in Calendar Year Ending  
Aircraft on Option
2007
2008
2009
2010
After
2010
 
Total
Rolling Options
B 737-600/700/800
-
-
-
14
46
 
60
120
B 767-300/300ER
-
1
2
2
5
 
10
2
B 767-400ER
-
1
2
2
13
 
18
-
B 777-200ER/200LR
-
1
-
2
8
 
11
13
Total
-
3
4
20
72
 
99
135

 

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