November 19 - Delta Offshores 20,000 US Aerospace Jobs


INDUSTRY ANALYSIS

Delta Air Lines Offshores Nearly 20, Ed Bastian, the CEO of Delta Air Lines, is a self-professed champion of US jobs. To hear him tell it, protecting American workers is his North Star. Along with its oligopoly partners American Airlines and United Airlines (Big Three), Mr. Bastian and Delta waved the stars and stripes urging the Trump Administration to clip the wings of competitors Emirates Airline, Etihad Airways and Qatar Airways (Gulf Carriers). The Big Three masqueraded their anti-competitive campaign in fictitious US jobs rhetoric to pander to President Trump.

However, in reality, their failed $50 million lobbying campaign against Open Skies and much-needed competitive choice was about one thing only: strangling competition to maximize profits. Judge Delta and its fellow purveyors of protectionism by their actions, not their political rhetoric.

On October 30, 2018, Reuters reported that an anonymous buyer purchased 10 Airbus A330neo wide-body aircraft for around $3 billion. Reuters speculated it was Delta. But why would Delta cloak its identity? Could it be Delta was trying to hide the glaring hypocrisy of demagoguing that it is the champion of US workers while simultaneously being on a purchasing binge of tens of billions of dollars of European and Canadian manufactured aircraft? 

Due to Reuters’ reporting, Delta was forced to come clean. It admitted it is the unnamed buyer of 10 Rolls Royce-powered Airbus A330neos with a market price of around $3 billion. Gil West, Delta’s Chief Operating Officer, proudly announced: “[e]panding our A330 order book not only ensures that Delta’s near-to-medium-term widebody needs are taken care of, but also drives our strategic, measured international growth.”

Prior to this forced confirmation, why was there rampant speculation that the purchaser was Delta? Why did the aviation community strongly suspect that - based on the US Department of Commerce’s aerospace jobs multiplier - it was Mr. Bastian and Delta who again chose to turn their backs on American workers and offshore nearly 20,000 additional US manufacturing jobs?

When you look at its history, Delta was the obvious choice. Delta is a serial outsourcer of US jobs, especially high-paying US aerospace manufacturing jobs.

In 2014 Delta purchased widebody aircraft to replace its aging Boeing 747s and 767s. Did Delta choose Boeing and US workers? No, it turned its back on US workers and instead offshored the jobs to Europe by purchasing 25 Rolls-Royce powered Airbus A350-900s – its new “flagship” aircraft according to Mr. Bastian and Delta COO Gil West – and 25 Rolls-Royce powered Airbus A330-900neos. With a reported market value of $14.3 billion, according to Commerce’s aerospace jobs multiplier, this Delta transaction alone outsourced more than 70,000 American jobs.

In December 2017, with Mr. Bastian telling every politician he could pigeon-hole in Washington that Delta’s fight against Open Skies and Gulf Carrier competition was solely motivated by protecting US jobs, Delta announced its decision for its narrowbody fleet renewal. Was the winner Boeing and its outstanding US workers, as well as Boeing’s nationwide supply chain including many small and medium-sized US businesses? No, again, Mr. Bastian and Delta turned their backs on US workers and again offshored the manufacturing jobs to Europe by announcing an order for 100 Airbus A321neo aircraft with an option for 100 more.  Based on Commerce’s jobs multiplier, this $12.7 billion choice by Delta cost more than 60,000 additional US jobs.

To show it is willing to share the wealth of offshored jobs, Delta is the launch customer for Canada’s heavily subsidized Bombardier C Series aircraft purchasing 75 C Series 100 with an option for 50 more. Delta’s favorite airframe manufacturer, Airbus, has since taken a majority stake in its C Series partnership with Bombardier rebranding the aircraft as the Airbus A220. Mr. Bastian recently added insult to US job loss injury by declaring that the Canadian-built CS100 will “be our [Delta’s] best domestic aircraft.”

Given this history of turning its back on US aerospace workers by offshoring Delta-related aircraft manufacturing jobs, no wonder there was widespread speculation the unnamed buyer was Delta. 

What about the Gulf Carriers, the villains in Mr. Bastian’s fairy tale about Delta championing US workers and job creation? Like Delta, do Gulf Carriers turn their backs on US aerospace workers?

No, Gulf Carriers walk the walk. Emirates Airline is the largest operator of GE-powered Boeing 777s in the world with 164 aircraft currently in its fleet.

Nothing illustrates this point more convincingly than the new generation 777X aircraft Boeing is developing that soon will be the finest and most modern widebody aircraft in the skies. When it came time to step-up for Boeing, its workers and its vast nationwide supply chain of small and medium-sized companies, Gulf Carriers did so in a big way. Delta and its oligopoly partners American and United have been nowhere to be seen.

To date, a total of 326 Boeing 777Xs have been ordered. Gulf Carriers purchased 235 - nearly 70 percent - of them. What about the Big Three, the self-proclaimed champions of US jobs? They have not purchased a single Boeing 777X. ZERO!

Contrast that with Emirates. It singlehandedly deserves credit for the launch of the Boeing 777X program. In November 2013, Emirates placed the largest order in commercial aviation history announcing it had purchased 150 GE-powered 777Xs worth $76 billion. According to Commerce’s jobs multiplier, Emirates’ commitment to the Boeing 777X will create and support over 436,000 US jobs. Had Emirates not stepped up for Boeing, its workers and its thousands of US suppliers, most people believe Boeing would have been unable to launch the next generation 777X program.

Next time you see Mr. Bastian, Mr. West or other Delta senior executives, ask them how they reconcile their red, white and blue political rhetoric with the tens of thousands of aerospace manufacturing jobs they continue to offshore. Also, ask them if indeed the Gulf Carriers are the threat to US jobs that they claim them to be, why is it that the Gulf Carriers’ purchases almost alone are supporting the Boeing 777X program and the hundreds of thousands of US jobs that rely on it. Facts are stubborn things.

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