Delta sees buyer's market for used twinjets; Boeing stock drops

(Adds Boeing share view, detail on plane prices, analyst comment, industry context, bylines)

By Jeffrey Dastin and Tim Hepher

Oct (HKSE: 3366-OL.HK - news) 14 (Reuters) - Delta Air Lines Inc (NYSE: DAL - news) on Wednesday forecast a buyer's market for used widebody planes, raising concern about Boeing Co (NYSE: BA - news) 's ability to command prices for new aircraft when airlines can buy old ones on the cheap.

Boeing shares fell more than 4 percent after Delta's Chief Executive Richard Anderson said he expects prices for used twin-aisle jets to fall. That could pressure prices of new aircraft still coming off production lines.

Anderson said on a telephone call with media that the used widebody market was a "bubble" and "ripe" for acquisitions by Delta over the next 12 to 36 months.

In particular, he said leases of used A330-200 aircraft from Airbus Group SE (Xetra: A1XBMK - news) would be five times cheaper than new ones. He said decade-old 777-200 aircraft from Boeing would cost $10 million, versus around $300 million at list prices.

Aircraft appraisers on average value such second-hand planes at more than $50 million, market sources said.

The news comes after a year of low fuel prices has encouraged some airlines to think twice about spending billions of dollars on next-generation jets, which help carriers decrease their intake of fuel, their largest variable expense.

Old planes from the likes of Singapore Airlines Ltd are expected to flood the market in coming years, Anderson said.

"We get calls all the time," Anderson said about used widebody planes, adding that no deal is in the works. "Prices are going to get lower. You wouldn't strike a deal now."

"We think that that weakness in that aircraft bubble in widebodies is going to spread to narrowbodies, and that there will be some huge buying opportunities," he said.

Delta has already taken advantage of cheap fuel and an in-house maintenance operation to add aging Boeing 717 planes to its fleet.

Boeing and Airbus did not immediately respond to a request for comment.

Executives at the manufacturers have reassured the industry over market prices for their leading long-range twinjets, while acknowledging some pressure on the oldest and smallest variants.

Canaccord Genuity Inc (Other OTC: CCORF - news) analyst Ken Herbert said in a research note that he believes a rate cut on the 777 is coming.

"But we do not believe the (widebody) weakness will spread to the (narrowbody) market, and we remain bullish on (Boeing's)stock" he said. "We believe Delta's comments were also somewhat self-serving."

Delta's partner Virgin Atlantic Airways Ltd is looking to acquire around 20 777s, Herbert said.

(Reporting by Jeffrey Dastin and Tim Hepher in Paris; Additional reporting by Alwyn Scott in New York; Editing by W Simon and Andrew Hay)