Proceeds from the sale of stock in Internet ticket-auction company priceline.com will enable Delta Air Lines to accelerate the retirement of its Boeing MD-11s and MD-90s. The $711 million raised by selling some of Delta's stake in priceline.com will also allow the airline to repurchase up to $500 million of its own stock.
Delta will take a charge of $320 million against its fourth-quarter earnings to cover the retirement of its 16 MD-90s and eight MD-11s over the next seven to nine years. The airline had planned to buy substantial numbers of both types - until Boeing acquired McDonnell Douglas and decided to terminate production of both aircraft. Delta has since ordered Boeing 737s and 777-200ERs for its future short and long haul fleet.
The Atlanta, Georgia-based carrier was the first airline to allow priceline.com to sell its tickets on the Internet. In return, Delta was given rights to a substantial stake in the e-commerce company. Priceline.com's initial public offering last year valued the airline's stake at over $1.5 billion.
Last year, the deal was renegotiated to enable priceline.com to offer American Airlines, United Airlines and US Airways shares in return for participating in its "name-your-own-price" service. In return, Delta was allowed to sell some of its stake. Delta retains substantial control over priceline.com's ability to sell tickets.
Source: Flight International
