Delta Air Lines CEO Ed Bastian has labeled President Donald Trump’s tariff policy “the wrong approach” and vowed that Delta would suspend pending Airbus aircraft deliveries before paying any tariffs on new planes.
Airbus Orders In Jeopardy After Delta Makes Clear It Will Not Pay Tariffs
Delta’s plans for growth in 2025 have stalled and the Atlanta-based carrier is drawing a line in the sand when it comes to tariffs, with Bastian making clear during the Q1 earnings call that Delta will not pay any duties on incoming aircraft:
“Obviously in this environment, we are going to work very closely with Airbus, which is the only airline we’ve got deliveries coming from for the balance of this year. And they’ve been a great partner. We’ll do our very best to see what we have to do to minimize tariffs.
“But the one thing that you need to know we are very clear on is that we will not be paying tariffs on any aircraft deliveries we take. These times are pretty uncertain. And if you start to put a 20% incremental cost on top of an aircraft, it gets very difficult to make that math work. So we’ve been clear with Airbus on that and we’ll work through and see what happens from that.”
I’m not sure what there is to “work through” to “minimize tariffs” when you start with the position that you will not pay tariffs on any aircraft delivery. I also doubt that Airbus is just going to sacrifice its margins for Delta or any customer. Ask to clarify, Bastian added in no uncertain terms, “We will defer any deliveries that have a tariff on it.”
The tariff, fixed at 10% for at least 90 days, threatens Delta’s A350-1000 and A330-900neo schedule and may also impact its A220 deliveries even though the final assembly of those aircraft is completed in the USA.
Tides Turn Quickly…
After President Trump was elected last November, Bastian rued that the U.S. Department of Transportation under Secretary Pete Buttigieg was guilty of a “level of overreach” and predicted the new administration would usher in a “breath of fresh air” when it came to regulations impacting delays and cancellations.
Delta also predicted 2025 would be the “best financial year in our history,” but has pulled its full-year forecast citing economic uncertainty.
CONCLUSION
Delta has said it will not pay for tariffs on new aircraft and will defer deliveries if necessary. This comes in the context of economic uncertainty and lower demand, particularly for economy class domestic travel, prompting Delta to pull its profit forecast for 2025. Is Delta bluffing despite having a huge aircraft order on the books with Airbus? We will soon find out.
‘I never thought leopards would eat MY face,’ sobs woman who voted for the Leopards Eating People’s Faces Party.
(https://x.com/Cavalorn/status/654934442549620736?lang=en)
Did you try to use an emoticon? For some reason, they don’t seem to work with my blog format.
Hi Matthew. Yes, it was a clapping emoji. Sorry, I didn’t know.
I wish I knew how to get them to display, but I don’t think they are compatible with this (aging) WordPress theme.
Buy Boeing?
Perfect opportunity for them if they could get their sh#t together and start delivering product on time.
Delta inherited an order for early 787s from Northwest; NW rejected those overweight models. DL waited until the A350 was more developed and began a massive widebody procurement process which ended with the A330NEO/A350 order about a decade ago. Boeing also participated but Airbus largely won because it negotiated with Rolls Royce for DL to gain engine overhaul rights for all of the engines in DL’s Airbus widebody order.
Add in that the 787 has faced numerous production and quality control issues and DL undoubtedly feels comfortable with the decision they made, esp. since the 787 is heavily built with foreign content.
DL converted the deposits for the 787 order into the 737-900ERs and those are the last new Boeing aircraft that DL has ordered until it placed its order for the MAX 10 which is delayed just as it is for other carriers.
DL repeated the process with the A321CEO and NEO and has the engine overhaul rights on the Pratt and Whitney Geared Turbofan as well as for the LEAP engine on the MAX, both of which DL said should generate $5 billion in revenue and $1 billion in profits in about 5 years, significantly offsetting DL’s ownership costs for its own fleet.
The only outstanding question is if DL will ever order the 787. GE reportedly was willing to give DL engine maintenance overhaul rights for the GEnx before DL placed its A350-1000 order.
Boeing aircraft are NOT immune from tariffs either. Boeing assembles aircraft here in the United States but sources parts from all over the world. Take for instance the 787 the wings on that aircraft are manufactured in Japan. Every wing Boeing now imports into the United States is subject to a 10% tariff at the border of entry.
When Airbus back in March said these tariffs would hurt US airlines they weren’t just talking about Airbus aircraft that also include Boeing aircraft. Every part on every Boeing aircraft that in imported into this country and there plenty of parts will now be subjected to a 10% tariff. Now way Boeing absorbs that cost they will pass that cost on to airlines.
Bastian’s comment – which was echoed by other CEOs – was about airline service regulation.
As for Airbus orders, let’s remember that nearly every US airline except WN has Airbus aircraft in their order book. Airbus delivered about as many A321NEOs to UA in 2024 as Boeing delivered MAXs.
The 787 is substantially made from imported components that are currently subject to the base 10% tariff.
The 737 is the only “mostly made in the USA” aircraft.
Bastian also said on the earnings call that tariffs on aerospace between the US and EU would hurt Boeing 6X more than Airbus.
The whole tariff issue will get resolved and it is precisely because Boeing is the largest US exporter and will bear the brunt of the rest of the world’s displeasure w/ the US until they believe they have a fair trading relationship with the US
Tim, thanks for your comment and I want you to know you are most welcome here on LALF. I appreciate your insight and I think you’re a decent guy. I will ensure that the “copycat” accounts do not surface here that serve only to mock you.
And to those who may want to attack him like he was attacked on OMAAT: please don’t. We can debate the issues and I do disagree with Tim on many things, but let’s keep it civil and discuss ideas, not other commenters.
Matthew,
That’s an interesting take…”attacked.”
You mean when folks called him out on his spewing opinions and calling them “facts,” and then him replying with ad hominem attacks, right?
Enjoy reading your blog, but you’re opening a can of worms here if you give him free reign to continue to post “facts” about his beloved DL without him bringing up the stats to back them up.
@Steve: I don’t mean that – if he posts incorrect facts, I hope you (or I) will challenge him on that and a fruitful discussion will ensue. I just won’t tolerate the personal attacks against him (“go back to your mother’s basement”) and indeed, I also will not allow him to attack others on a personal basis.
Those are the ground rules.
thank you, Matthew. You honestly won we over with your recent article about the cost of speaking your mind.
I have participated in airline social media for about 25 years or whenever Al Gore invented the internet -whichever came first.
I speak my mind and I encourage others to do the same. The world does not know how to respectfully disagree w/ people with whom they don’t agree. If you can achieve what few other sites can or have done, then you will have a lifelong follower and advocate to help you grow your business.
Social media – regardless of the type – has to be moderated and controlled. But that does not mean censoring users or allowing them to be played against each other.
The aviation social media “industry” is not a growth market and it is highly competitive. I want to support those that allow respectful interaction by users that are willing to bring different perspectives and listen to others. Where facts exist, they supersede opinions. IF someone doesn’t think someone else’s facts are correct, then present your own.
I look forward to a great time for all on LALF.
—-
specific to the Delta – Airbus issue and the larger aerospace trade issue, the fairness of the Airbus-Boeing relationship has been litigated over and over. Both are enormous sources of value for their economies and to the world. regardless of whatever happens to other industries, I hope Airbus and Boeing are removed from the larger trade discussions at a very early date.
Bastian is very likely negotiating in public – just like the President is doing. Let’s see what other airlines announce or do if a trade agreement between the US and Canada, the EU and Brazil is not announced in the near future.
By virtue of going first in the earnings cycle, Delta very often sets the tone for the global industry.
Tim,
Nice try…you got exactly what you deserved from Ben at OMATT after YEARS of spewing opinions and attacking anyone who dared question Delta. Then, when Ben gave you a well-deserved ban, you created burner accounts and continued your juvenile behavior.
Those of us who frequent these travel blogs will continue to challenge your “facts” and call you out on your behavior.
Steve,
see Matthew’s comment above.
I am not here to discuss what goes on any other site on the web. I would also hope that Matthew quickly nips in the bud attempts by some to quote or link activity by users on any other site. This is Matthew’s site.
I am here because Matthew expresses the same philosophy as I do. I, like him, speak my mind and I never shy away from a good conversation.
If you disagree w/ what is stated as fact, provide your own.
If you disagree w/ opinions, state yours as I will and then recognize it is a mark of valor to respectfully disagree.
specific to this discussion, there are enough facts and evidence to know that DL is one of if not the toughest negotiators for airplanes and related products and services. They are also Airbus’ largest customer and Airbus has delivered for Delta while Boeing has struggled to deliver for other US airlines.
None of Airbus, Boeing or Delta want to be in a trade war. The aerospace and airline industry by nature is globally connected. By going first in the earnings cycle, DL highlighted issues that every other airline will have to answer.
Sources speaking to one industry-related podcast said tariffs are not in the contract they have with the airframe manufacturer (not sure who the airline or supplier is) and they don’t intend to pay them. I simply say to them “good luck” if you think you are going to force any company to eat tens of millions of dollars esp. since the trade situation is very fluid.
Everyone (well at least almost everyone) recognizes) that the trade war we are engaged in is highly destructive to wealth and profits for business and individuals. Let’s see how it plays out and count the wounded and dead when it is over. I am hopeful that previous battles between Airbus and Boeing over subsidies will provide the groundwork for aerospace to be quickly excluded while cooler heads prevail on trade involving other products and services.
A UA fanatic and UA hater under the same roof. This will be fun.
@Matthew
When there is smoke, there is fire.
And now you’re playing fluffy fire.
Play you cards right LALF will get more traffic for sure.
Tim does have interesting things to say, in a good and bad way. Too bad for him more people see through his fluff and he couldn’t handle it the civil way.
@Tim and all his alter ego
Don’t burn down your new home.
Reflect on your feedbacks and accept the facts not Tim’s facts.
Eskimo,
He won’t.
Banned from OMATT, a.net, and routinely moderated on CrankyFlyer.
So loathed on OMATT and VFTW that he has folks making troll accounts just to mock him.
Leopard can’t change his spots…and we’ll be here to call him on it when he reverts back to his usual behavior.
But for now, at least on LALF, he starts with a clean slate. Thus, any further comments about his history on other sites will be deleted.
Let’s try, please, to make it about the issues (i.e. Delta buying new aircraft and how tariffs impact it) and not the person.
My head is not buried in the sand…I understand the history…but maybe lessons have been learned.
I have to say, I like this site but I really don’t understand what comes across as sucking to a madman like Tim.
He routinely attacks Ben and Gary personally when they write something disagrees with.
And always attacks others viciously when he drinks at night.
This is very off putting to welcome home like you are, Matt.
Let him post, but that welcome? Really?
And that’s not even talking about all his fake accounts he uses.
Sorry I can’t type today
and this is related to tariffs, Airbus and Delta how?
thank you for confirming that the airline social media community is pretty small and the stories and people are not much different depending on the site.
The difference is how each site tolerates different perspectives and manages dissenting opinions and personalities even when uncomfortable perspectives are presented.
I am just as optimistic that Matthew do a great job as I am that this whole tariff mess will be resolved w/ fairly mild wounds for airlines.
We’ll get more perspective not just on tariffs but also on booking trends when United reports next week and the rest of the US and foreign carriers follow
Put this prediction by Bastian right up there with Doug Parker’s “we will never lose money again”.
Anyone who trusts or believes a guy who was given the keys to an airline, but has multiple DUIs on his record deserves to lose $.
Funny thing is that Qantas has him on their board, given how uptight Australia is with letting in folks with criminal records.
What a schmuck. Maybe someone should explain to Bastian that Airbus is not an airline. I hope he’s enjoying his breath of fresh air.
I think this is a case of “never waste a good crisis”
Delta probably saw the looming recession and travel slump and probably doesn’t want the planes and the extra capacity associated with them. Found an excuse to blame tariffs when Ed backed the wrong horse in Trump and his “breath of fresh air” policies. In hindsight, it was all on paper for the last few years in Project 2025. Tariffs were always part of the plan, but even Trump went off script from the plan and went hard on tariffs
I have no doubt Delta would have paid the tariff if there wasn’t a potential (and likely) travel slump on the horizon. To me, this is Delta playing the PR/marketing game (something they do very well overall)
I wonder if more airlines do this, will it result in layoffs at AirBus Mobile Alabama plant. That would be sweet.
It’s interesting when you think about it that Delta chooses – as is their right – specifically not to buy American from Boeing and then cries crocodile tears of self-pity when they deal with the actual repercussions of buying from a foreign company. The Delta snowflakes need to man up, they built their house now they can live in it.
It is ironic that the percentage of US content is listed on the window sticker of new cars sold in the US but only the final assembly point is listed on the safety card for US registered commercial aircraft
The only commercial aircraft that is majority built in the US with US components is the 737MAX and it still has as much as 30% imported content.
The LEAP engines on the MAX are part of a joint venture between GE and Safran of France.
The 787 is assembled in the US of content that is primary foreign sourced.
Some A320 and A220 family aircraft are built in Mobile for US airlines but still heavily use foreign components.
The tariffs as they exist right now does not eliminate tariffs on intermediate parts.
The Pratt and Whitney Geared Turbofan -as on some A321NEOs and the A220 – is built in N. America of mostly U.S. components but it, like most aerospace products contain foreign components.
LEAP engines on European A320 family aircraft are often built by Safran in Europe.
And, as Bastian pointed out, Boeing will be hurt 6X more by an aerospace trade war than Airbus will be.
great discussion but it should be obvious that there will be carveouts for commercial aircraft and likely well before other trade issues are resolved.
Interesting that you don’t address the points I made.
He did, in his fluff way, with one sentence.
You need to fish it out of those irrelevant 9 paragraphs.
And even that one sentence doesn’t directly address your point.
Welcome to Tim Dunn.
Delta DOES have the MAX on order and has a fairly young fleet of 737-900ERs as well as remains the largest passenger operator of the 757 and 767.
Nearly every other US airline also has Airbus aircraft on order and all of them will be subject to tariffs as they exist today.
Boeing does not sell a commercial aircraft that will be free of tariffs.
Tariffs on aerospace is not a “buy from Boeing and you will avoid them” issue.
Slightly OT, but it’s funny to hear Bastian claim Buttegieg has too much “overreach.” Chronically delayed and distressed pax in the US still don’t have any meaningful rights despite airlines claiming otherwise. The US aviation market is an oligarchy that gets free money from the government, and has no real responsibilities in return.
Jerry,
“It’s all about the shareholders. Screw the passengers!”S
-Airline CEOs (probably)
Matthew, Ed Bastian’s name is misspelled in the second paragraph of the article.
Thank you, I corrected that.
Does this mean that Never in Doubt, Maxpower, Julia etc are all going to post more here now so they can continue fighting Tim Dunn?
But they could just buy Boeing. Oh, wait…
American and Delta’s mainline fleets are both within a percent or two of half Airbus and half Boeing and will stay that way