Delta Air Lines CEO: We Will Not Pay Tariffs On New Airbus Deliveries
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 Basitan 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.