Delta Sees 757 Engine Overhauls As Smart Investment

Delta Air Lines sees a recent jump in maintenance costs to overhaul engines for its venerable Boeing 757 fleet as an easy decision given the benefits those aircraft offer in its network.

“The returns are very good related to how we deploy it and fly it within our network,” CFO Dan Janky said on the company’s recent 2023 third quarter (Q3) earnings call. “So we have leaned on it. We have reactivated more as we continue to see new deliveries slide.”

Delta’s Q3 costs for “aircraft maintenance materials and outside repairs” rose 26%, a regulatory filing shows--much of it driven by overhauls of Pratt & Whitney PW2000 engines that power the 757s. While Delta expected the uptick, Janky cited larger workscopes and the need to use more new parts that in the past as reasons for a higher-than-anticipated jump.

“We’ve depleted our used material,” Janky said at a Morgan Stanley investor event in September, adding that the wave of overhauls will run into 2024. “That gets us through a heavy wave that then allows us really very viable engines.”

Delta’s order book includes 737-10s as well as Airbus A321neos and A220-300s. Deliveries of all three have been delayed for various reasons. The 737-10 is not yet certified, while A321 deliveries have been delayed by several months for some operators. The 757’s mission profile is closest to these two models.

Delta’s investment in its older Boeing narrowbodies gives it both insurance against more supply chain problems and some future capacity flexibility. Delta has 112 757s in service and another 12 parked or in long-term storage.

Delta President Glen Hauenstein noted on the Q3 call that the fleet includes a high number of deliveries near the late 2004 date when 757 production halted. “We took a lot of late deliveries,” he said.

Fleet Discovery shows 43 of Delta's in-service 757s were delivered in 2000 or later.

Those aircraft are both easy to invest in and can be supported later in the decade by parts from the oldest airframes as they are retired. “As we get to the end of life of these towards the end of this decade, we’ll be able to really start harvesting the engines, which will really improve the maintenance profile of the fleet,” Hauenstein said.