Delta TechOps Agrees to 10-Year, $1 Billion Deal With Chromalloy for Parts Agreement, MRO Engine Work

ATLANTA, Nov. 7, 2007 (PRIME NEWSWIRE) -- Delta Air Lines (NYSE:DAL) has reached a 10-year, $1 billion plus deal with Chromalloy Gas Turbine Corporation, which marks the largest and most significant Parts Manufacturing Approval (PMA) agreement in the airline industry, adds the CFM56-5 to Delta TechOps -- the airline's Maintenance, Repair and Overhaul (MRO) division -- engine overhaul capabilities and will result in 250 additional engine overhauls.

"This is a significant development for the future of our industry and one that signals the dynamic, out-of-the-box strategy for which Delta TechOps is known," said Tony Charaf, senior vice president of Delta TechOps. "Chromalloy already has extraordinary capabilities in PMA development and by working with them, Delta TechOps will be well positioned in the marketplace to better compete and, in turn, offer greater flexibility to our more than 100 customers worldwide."

As part of the deal, Chromalloy will develop PMA alternatives for a number of parts commonly used in the CFM56-7 and CFM56-5 engines, including several Life Limited Parts (LLP). Delta and Chromalloy will work together on the development of the PMA parts, and Delta will serve as the launch customer by incorporating certain parts in its own large fleet of CFM56-7 engines. The CFM56-7 is the exclusive engine used on Boeing's 737 Next Generation aircraft and represents the largest fleet of engines flying today. The fleet is expected to double in the next 10 years, growing to more than 12,000 engines.

"Delta TechOps is highly regarded in the MRO industry for providing not only maintenance services for Delta's own engines, but also increasingly for third parties. We look forward to working closely with Delta's extremely qualified staff of engineers and technical professionals on this important program which is a new milestone for the entire industry," said Christine Richardson, Chromalloy's chief executive officer. "This will build on the strong technical and service relationship we already have with Delta, as our interests are uniquely aligned on this large aftermarket program."

While Delta TechOps currently performs engine overhauls on the CFM56-7, this deal will add the CFM56-5 engine type to the extensive list of engines it services which includes the PW4000, PW2000, JT8D-219, CF680A, CF680C2 and CF34 engine lines. As the engine of choice on Airbus aircraft including the A318, A319, A320 and A321, the CFM56-5 represents a significant addition to Delta TechOps' overhaul and repair capabilities. With the PMA parts program, Delta TechOps will offer its customers an industry leading alternative for their CFM56-7 and CFM56-5 overhauls.

The deal also includes 250 engine overhauls to be performed by Delta TechOps professionals over the term of the agreement, which also will add to the impressive growth of Delta TechOps' engine maintenance business. In 2007, Delta TechOps will overhaul more than 220 customer engines.

The agreement with Chromalloy complements Delta TechOps' growing list of strategic sourcing partnerships, all of which include elements that continue to help grow the MRO business. Already this year, TechOps has announced agreements with Pratt & Whitney and CFM International. With this agreement, Delta TechOps will be the world's largest third-party CFM engine overhaul provider.

"Our MRO business will continue to grow, thanks in large part to our dedicated, highly skilled and flexible employees, as well as our capacity and product offerings," said Charaf. "Reciprocal strategic sourcing is another platform of growth for our successful MRO business, and we will continue to look for ways to add value and grow our business."

Chromalloy Gas Turbine Corporation, Sequa's largest business unit, provides the airline industry with a broad range of aftermarket services and ranks as the leading independent supplier of advanced repairs for jet engine parts. Chromalloy operates around the world and around the clock, providing airlines with timely, cost-effective, and proven repairs for turbine airfoils and other critical engine parts - repairs that extend the life of the parts and hold down airline maintenance costs.

Delta TechOps is the largest airline MRO in North America, earning more than $310 million in revenue in 2006. In addition to providing maintenance and engineering support for Delta's fleet of 440 aircraft, Delta TechOps serves more than 100 aviation and airline customers from around the world, specializing in high-skill work like engines, components, hangar and line maintenance. Delta TechOps employs more than 6,500 maintenance professionals and is one of the most experienced MRO providers in the world with more than seven decades of aviation expertise.

Statements in this news release that are not historical facts, including statements regarding our estimates, expectations, beliefs, intentions, projections or strategies for the future, may be "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. All forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from the estimates, expectations, beliefs, intentions, projections and strategies reflected in or suggested by the forward-looking statements. These risks and uncertainties include, but are not limited to, the actions and decisions of our creditors and other third parties with continuing interests arising in connection with our Chapter 11 proceedings; the cost of aircraft fuel; the impact that our indebtedness will have on our financial and operating activities and our ability to incur additional debt; the restrictions that financial covenants in our financing agreements will have on our financial and business operations; labor issues; interruptions or disruptions in service at one of our hub airports; our increasing dependence on technology in our operations; our ability to retain management and key employees; the effects of terrorist attacks; and competitive conditions in the airline industry.

Loading