Delta Air Lines anticipates double-digit revenue growth from its recent deal with Pratt & Whitney to maintain certain Geared Turbofan Engines in the Americas.
Revenues at Delta TechOps, the Atlanta-based carrier's MRO subsidiary, are forecast to grow by about a third to $1 billion annually under the engine maintenance deal, said Ed Bastian, chief executive of Delta, at the Bernstein Strategic Decisions conference on 30 May.
Delta TechOps generates roughly $750 million in revenue annually today, he says.
The airline does not break out financials for its MRO unit, however, the revenue number provided by Bastian equals nearly 2% of its $41.3 billion in total operating revenues in 2017.
Delta is the exclusive maintenance provider for the PW1100G engine on the Airbus A320neo family and PW1500G on the Bombardier CSeries family in the Americas under the deal that was first announced in December 2017.
The carrier anticipates work on roughly 5,000 engines as a result of the deal, says Bastian.
"Out of every three engines we build in Atlanta, up to two of them are for somebody else," he says on the engine work done by Delta TechOps.
David Vernon, a senior analyst at Bernstein, calls TechOps a "very differentiated part of Delta relative to other airline investments".
No other US carrier has an in-house maintenance provider that does the volume of work on other airlines' aircraft.
Delta will not feel the full benefit of the P&W deal until the 2022-2023 timeframe, says Wolfe Research analysts in a report on comments made by Delta president Glen Hauenstein at an event on 22 May that was not webcast. The revenue lag is the result of delivery and maintenance schedules for the engines.
Flight Fleets Analyzer shows just 62 A320neo family and CSeries family aircraft in service in the Americas by the end of 2018. That number will increase dramatically to 516 aircraft by 2022.
Delta has firm orders for 100 A321neos and 75 CS100s.
Source: Cirium Dashboard
