Virgin Australia chief executive John Borghetti says his airline is in no hurry to place an order for new widebody aircraft, pointing to the relatively young age of its six Airbus A330-200s and five Boeing 777-300s.
While the average age of its mainline fleet was 7.1 years at December 31 2017, up from 6.4 years 12 months earlier, it is a different story for the widebodies.
As a result, the airline group has time on its hands to consider what would best meet its widebody needs
“As we talk about widebody replacements, and when we do it and what we replace them with, and I am talking about the 330s and the 777s, that’s really a long way away,” Borghetti told reporters during Virgin Australia’s first half results presentation on Wednesday.
“Our average age of the A330s is about four and a half years or thereabouts. Our 777s are also a very young aircraft.
“Some time in sort of, let’s call it early- to mid-2020s we will probably look at changing those when the leases coincide for replacement.”
Virgin Australia took delivery of its first factory fresh A330-200, which are used on domestic routes between Perth and the eastern states capitals and on the Melbourne-Hong Kong route, in early 2012 when VH-XFC rolled off the Airbus factory in Toulouse. The sixth, VH-XFJ, entered the fleet in the second half 2014. All six aircraft are leased.
The airline previously operated two ex-Emirates A330-200s, which have been withdrawn.
Meanwhile, the five 777-300ERs that serve Los Angeles from Brisbane, Melbourne and Sydney arrived between 2009 and 2010. Four are owned and one is leased.
The airline has previously indicated a preference for replacing both the A330-200s and 777-300ERs with a common fleet type for its widebody operations.
The projected timeline Borghetti articulated on Wednesday also puts the 777-8X and -9X into the frame, given the -9X is slated for entry into service by 2019, with the -8X expected to follow about two years later. However, aviation watchers believe the 777-X family’s two aircraft would be too large to service Virgin Australia’s United States, Asian and domestic trans-continental network.
Virgin Australia has no outstanding orders for widebody aircraft.
As a result, it has had to pull aircraft off some routes to expand its network, as it did with the start of A330-200 Melbourne-Hong Kong flights when some services between Perth and Australia’s east coast capitals were downgauged to 737-800s.
Meanwhile, Virgin Australia’s has at times temporarily reduced its schedule to Los Angeles when its 777-300ERs have gone for their regular maintenance checks. It also ended Sydney-Abu Dhabi services in favour or resuming Melbourne-Los Angeles nonstop flights in April 2017.
There is also the prospect of further reductions to A330-200 services on trans-continental flights to and from Perth from mid-2018, when Virgin Australia commences daily Sydney-Hong Kong flights.
Today we’re excited to announce that we plan to commence daily return services between Sydney and Hong Kong from mid-2018. The flights will operate on our Airbus A330, bringing the world’s best Business Class, ‘The Business’, to the route. ✈️🇭🇰 pic.twitter.com/tAclGRn2Sy
— Virgin Australia (@VirginAustralia) February 28, 2018
The use of the A330-200 on services to Hong Kong and, eventually it was envisaged mainland China, has led to suggestions Virgin Australia would develop a sub-fleet of 737s with similarly appointed business class cabins to serve the Perth from the Australian east coast.
While Borghetti declined to offer details about whether any new cabin products were in development, the chief executive did promise its Perth services would match anything its rivals were offering.
“We will never have an uncompetitive product on a very important route like east coast-west coast. Of that you can be sure,” he said.
The airline’s A330-200s are configured with 20 business class seats dubbed “The Business” with direct aisle access for every passenger and 255 economy class seats at eight abreast (2-4-2).
By contrast, the 737-800s have eight business class recliners in a 2-2 configuration and 168 economy class seats in a 3-3 layout for a total of 176.
Waiting for MAX
Where Virgin Australia does hold orders for new aircraft is in the narrowbody segment.
The airline’s initial order for 23 737 MAXs made in July 2012 had the aircraft being delivered from 2019 to 2021.
Then in August 2014, Virgin Australia brought forward first delivery to 2018.
The airline group then converted orders it held for 17 737-800s into 737 MAX 8 orders, lifting its total order book for the type to 40 frames, in August 2015.
Then in February 2017, Virgin Australia decided to postpone first delivery of Boeing’s next generation narrowbody to the final quarter of the the 2019 calendar year.
At December 31 2017, the Virgin Australia group of airlines had 81 737-700/800 aircraft.
The MAX family of aircraft features a new flightdeck, fly-by-wire spoilers and new technology winglets compared with the current model 737 NG. It is powered by two CFM International LEAP 1B 176cm fan diameter engines, compared with the CFM56 155cm fan diameter on the NG.
To accommodate the larger diameter engine, the MAX incorporates a taller nose wheel landing gear leg, while the engine nacelles’ trailing edges feature noise-reducing chevron shaping, as also seen on the 787.
The 737 MAX 8 entered commercial service with launch customer Malindo Air in May 2017.
The 737 MAX represents Virgin Australia’s only outstanding aircraft order.
While the initial 2012 order was for the MAX 8 variant, Virgin Australia has declined to break down its current 737 MAX order into the various sub-types such as the smaller MAX 7 or larger MAX 9, MAX 10 or MAX 200.
“For competitive reasons we won’t go into it but it is fair to say that we are constantly talking with Boeing about what the best narrowbody aircraft is, whether it is a MAX 8 or other types,” Borghetti said.
“But the one thing that is for sure is that the 737 will absolutely be the backbone of the domestic fleet, or the short-haul fleet if you will, for the group for many, many years to come.”
A slide presentation accompanying Virgin Australia’s 2017/18 first half results – the airline posted a return to profitability amid better conditions in the domestic market – said it was working with Boeing on “optimising delivery timing” of the 737 MAX, with a “positive impact on the balance sheet” expected in 2018/19.
Virgin Australia chief financial officer Geoff Smith reiterated there was no change to the previously targeted first delivery date in the final quarter of calendar 2019. However, the airline is talking to Boeing about the schedule for subsequent aircraft.
“We are always in constant contact with Boeing on the delivery dates on the whole order book, including those lead aircraft,” Smith said.
VIDEO – Virgin Australia’s 737 MAX delivery timeframe is uncertain, but what is certain that in VA colours the aircraft won’t be put through its paces quite like as in this Boeing airshow routine.
737 NG order book completed
The airline took delivery of its last Boeing 737-800 on order in late January. Named Dreamtime Beach and registered VH-YWE, the 737 arrived in Brisbane on January 31 after transiting Kona, Hawaii and Nadi, Fiji on its delivery flight from Boeing Field.
“This week, we’re very happy to have welcomed our newest Boeing 737-800 Next-Generation (NG) aircraft to our fleet, named Dreamtime Beach,” the airline wrote in a blog post on its website. ”
“This delivery completes our Boeing 737 fleet of more than 80 aircraft.”
In early February, Virgin Australia withdrew the last of its Embraer E190 regional jets, with VH-ZPH operating the last flight as VA1105 from Newcastle to Brisbane.
At its peak, there were 18 E190s flying in Virgin Australia colours, with seven leased and 11 owned according the airline’s financial reports from previous years.
While the aircraft is no longer being operated, there are some Embraer E190s, as well as a number of leased ATR 72-500s that have also been withdrawn, in storage being remarketed for new operators, Smith said.
“We’re obviously downsizing the size of the ATR fleet so they are indeed leased aircraft and we are looking at market opportunities to place those elsewhere at the moment,” Smith said.
“We are actually in a very advanced stage of signing indeed LOIs [letters of intent] on up to three of the [aircraft] across ATRs and E190s, LOIs on those fleet leases.”
Tigerair fleet in transition
Virgin Australia also offered an update on the transition of its low-cost carrier Tigerair Australia from Airbus A320s to Boeing 737 equipment.
The fleet change was first announced in July 2016 and is part of the company’s “Better Business” program, which seeks to achieve $350 million a year in savings by 2018/19.
At the time, the company said Tigerair Australia would progressively replace its 14 A320s to 737s over a three-year period.
The first of three 737-800s in Tigerair Australia livery – the aircraft were part of the Virgin Australia fleet – emerged from the paintshop in late 2015, ahead of the start of the LCC’s services to Bali from Adelaide, Melbourne and Perth in March 2016.
However, Tigerair Australia was forced to permanently withdraw from Bali in February 2017 after reaching an impasse with Indonesian regulators over its permits to serve the Indonesian tourist hotspot.
Smith said the end of services to Bali left Tigerair Australia with surplus aircraft that had been temporarily deployed on its domestic routes. However, two of those surplus aircraft were withdrawn earlier in February.
Virgin Australia’s results presentation said Tigerair Australia’s fleet replacement plan was being “expedited”.
“Our primary focus was on the VA domestic subfleets, being the E190s and ATRs,” Smith explained.
“Given that we have shown good progress on that, our intention is concurrently turning to the A320 program.
“Definitely it has already commenced and it will be continuing to the back end of that third year of the program and into the fourth.”