Delta plans fleet overhaul, considering Alitalia investment

(Reuters) - Delta Air Lines is planning to replace one-third of its mainline fleet in the next five years, while still deciding whether or not to invest in struggling Italian carrier Alitalia, Chief Executive Ed Bastian said on Tuesday.

Delta’s decision on its fleet replacements, which it said would not change its capex guidance, will pit U.S. manufacturer Boeing Co against its European rival Airbus SE.

Further out, Delta also needs to replace almost 200 Boeing 757 and 767 aircraft, a category that Boeing Co is targeting with a potential new midsize plane, known as the NMA.

Speaking at a J.P. Morgan conference, Bastian said Delta is “very interested” in the NMA and was in preliminary discussions with Boeing on it.

Boeing is weighing whether or not to launch the new program next year.

“Hopefully they’ll decide to go,” Bastian said.

Airbus is also targeting that category with a spruced up version of its A321.

Delta shares were up 1.7 percent at $49.62 in midday trading.

ALITALIA INVESTMENT?

Bastian said it was too early to decide whether or not to invest in Alitalia and said that the numbers being thrown around so far are “pretty large” and “not the kind of numbers that we’re considering, just to quell any concerns.”

Italy’s state-controlled railway Ferrovie dello Stato (FS) said last month it would start negotiations with Delta and easyJet to draft a rescue plan for the struggling airline.

Bastian said the Italian market is important for U.S. consumers and a great travel destination, so it makes sense to consider an investment there.

Delta’s global growth over time will skew toward international rather than domestic markets, which are more congested, he said. That growth could come through direct investments in overseas carriers.

“You can’t actually own partner carriers so you have to find ways to influence them beyond just a commercial contract as a partner, and what we have found is that by making an investment into these businesses we can get actually inside the board room and help to start shape the strategy.”

Reporting by Tracy Rucinski; Writing by Nick Zieminski; Editing by Phil Berlowitz