Executive VP, President of Delta TechOps & Chief of Operations, Delta Air Lines
Delta Air Lines exec: Jet engine servicing center ‘is another revenue stream’
DeltaAirLines #youtube #airlines Delta Air Lines EVP and Chief of Operations John Laughter joins Yahoo Finance Live anchors ...
About John Laughter
John Laughter, Executive Vice President and Chief of Operations at Delta Air Lines, spoke about the opening of a new engine repair shop in Atlanta, Georgia, for Pratt & Whitney GTF engines. He described the facility as a continuation of Delta Tech Ops' advancement into next-generation engine platforms, noting that it services Delta's A321 Neo and A220 aircraft while also serving over 100 other airlines. Laughter stated that the shop is "another revenue stream" for Delta, adding that the company has been investing in third-party capability for more than 20 years. He said the shop will perform more than 10 percent of GTF engine overhauls in its first year and has the capacity to expand to over 400 engines annually. Laughter emphasized that the maintenance, repair, and overhaul (MRO) business benefits Delta by improving the reliability of its own fleet, allowing engines to be repaired and returned to service faster and reducing the need for spare assets. He noted that the airline industry rebounded quickly after the pandemic, returning to pre-pandemic levels by 2022. Laughter also stated that Delta Tech Ops will be the only shop in North America capable of handling three next-generation engine platforms: the Pratt & Whitney GTF, Rolls-Royce Trent, and CFM International LEAP engines.
Transcript (16 segments)
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Narrator0:01
Delta Airlines is celebrating the opening of a new repair shop in Atlanta, Georgia, for Pratt and Whitney GTF engines that power Delta's fleet of jets and those belonging to its maintenance, repair, and overhaul customers. Here to discuss this latest investment to bolster Delta's infrastructure and resources is John Laughter, who is the Delta Airlines Executive Vice President and Chief of Operations. We've also got for the conversation along with us Yahoo Finance's Pras Subramanian. Gentlemen, thanks so much for taking the time here with us on the day. John, just to kick things off here into this partnership, what really led to this, especially as you look through the fleet that Delta operates right now?
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John Laughter0:42
Well, first of all, thanks for having us here today. It's a great day at Delta Tech Ops as we open this new engine shop, and this is just the continuation of our Tech Ops team's advancement into the next generation engine platforms. So it matches well with our fleet. It powers our newest A321neo airplanes as well as our A220 aircraft, but it also gives us another chance to show the world what we're capable of doing for over 100 airlines around the world.
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Pras Subramanian1:12
Hey John, Pras here. So not only is it going to service Delta planes, but also other customers, other airlines, and it's sort of an additional revenue stream for the company. Isn't that right?
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John Laughter1:22
That's absolutely correct. It's something that we have been investing in for more than 20 years, growing our third party capability. So you're exactly right, this is another revenue stream for Delta.
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Pras Subramanian1:36
What type of contribution to revenue do you believe that this will be, John?
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John Laughter1:40
Well, I'm really not prepared to talk about that today. What I am prepared to say is that this is an engine shop that will do more than 10% in this first year of the engine overhauls on the GTF engine, and we'll have the capability to expand to well over 400 engines a year when we get up to full capacity.
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Pras Subramanian1:58
Hey John, so the MRO business, I mean in terms of what Brad was talking about, what are some of the margins we're talking about in terms of servicing? Is it much higher than say usual operations with flights?
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John Laughter2:09
The margins, is that what you're asking about? Yes, correct. You know, the MRO business is good, particularly when you have a group of people like I'm fortunate enough to work with here, that are developing high-tech repairs, working with the technicians on the next level of repair that we can do to engines. Engineers investing time in developing repairs, and that's what really makes this a good business to be part of.
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Pras Subramanian2:41
And when you speak about that time and making sure that the repairs are done so swiftly and getting these aircraft back into the fleet and into the skies as well, what type of turnover is this going to really kind of... I didn't want to say what's the Delta around this turnover from previous operations to now, but what is that change? What's the net change as a result of this investment?
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John Laughter3:06
Well, there's no doubt that one of the benefits to us being in this business is improving the reliability of our own fleet. So again, having the high-tech workforce that we do that is involved in turning these engines, there's two things that you do. One is through process, you get them off wing, repaired and overhauled, and back on wing faster, meaning you need to own less additional spare assets. And then also the ability to develop high-tech repairs. Both of those things together are what really increases or separates us from others.
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Pras Subramanian3:47
Hey John, so just looking at it from your point of view, operation standpoint, from 2024 for this year versus let's say pre-pandemic, how are things looking? Is the business still kind of growing, or is it bigger than what it was before we had the pandemic?
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John Laughter3:59
Yeah, so overall, you know well the story at Delta and the airline industry. The entire industry took a small step back as we entered the pandemic just with uncertainty, but that rebounded very quickly starting in 2021, and then we saw 2022 continue to build as people put their aircraft back into service, including Delta. So I think it's really back up to the level that we saw at pre-pandemic and continues to grow.
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Pras Subramanian4:30
And when you think about the number of planes that are part of that operation right now, if there was a percentage of planes where you're looking to see some of that churn as you're moving into some of the delivery of new orders that you've already placed, and a lot of the industry has been tracking some of those orders that have been made either into Airbus or into Boeing especially over the past two years, you know what is that percentage of planes that you see being sunset, those that are going to be serviced, and then those that are anticipated to be taken on and infused to the operation?
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John Laughter5:03
You know, I'm not sure I can give you the exact numbers or percentage. What I'll tell you is Delta Tech Ops is going to be uniquely positioned. There are three next generation engine platforms. One is the Pratt & Whitney GTF engine that we're celebrating today. Delta is also in the Rolls-Royce Trent engine, and we will soon be in the CFM International LEAP engine. Those three platforms are really what the future deliveries are about. These are the new efficient, quiet, fuel-efficient, fuel savings, next step in sustainability engines. And Delta is going to be the only shop in North America that can handle all three of those platforms.
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Narrator5:46
Delta Airlines EVP and Chief of Operations John Laughter alongside Yahoo Finance's Pras Subramanian. John, look forward to hearing more from you and the team around this advancement. Appreciate the time this morning.
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John Laughter5:57
Thanks so much for having me.