Virgin Atlantic could expand fleet in deal to replaces 747s

June 11
7:01 PM 2015

Virgin Atlantic [VA.UL] plans to decide within six months on how to replace seven Boeing 747s it flies from London's Gatwick airport, and could expand its overall fleet in the process, the British airline's chief executive said Thursday.

"The options we are most serious about are the (Airbus (AIR.PA)) A350, the (Boeing (BA.N)) 787-10 and 777-300ER jets. Those are the aircraft we are most likely to choose," CEO Craig Kreeger said in an interview ahead of the airline's formal launch of service between London and Detroit.

When Virgin Atlantic decides, he said, the order "will be replacement, plus."

Kreeger told a conference in November that Virgin would decide on the fleet plan within the next nine months, implying a decision by the end of August.

Virgin Atlantic has 39 planes, and is renewing its fleet after returning to profitability last year. Virgin has ordered 17 Boeing 787s as part of that process.

Virgin is still deferring a decision on whether to take six Airbus A380 jumbo jets, Kreeger said.

"We have not yet concluded that we have enough markets that are big enough to make the A380 make sense," Kreeger said. Virgin is discussing options with Airbus, and will continue to evaluate the A380 order.

Virgin's service to Detroit is part of a broader expansion of the airline's trans-Atlantic service in collaboration with U.S. airline Delta Air Lines, which owns a 49 percent stake.

Virgin has shifted more planes to trans-Atlantic routes this year after shutting down service to certain other destinations, including Mumbai, Vancouver, British Columbia, and Capetown, South Africa.

The expansion of capacity between Britain and the United States is putting pressure on yields: revenue per passenger per mile flown, Kreeger said. Overall, he said, the shift is good for Virgin because the trans-Atlantic flights replace service to markets "where we are doing very poorly."

Kreeger said Virgin is "very confident" that it can compete with IAG (ICAG.L), the owner of British Airways, if IAG gains control of Irish carrier Aer Lingus. However, Kreeger said Virgin "would encourage the EU" to assure that Virgin can continue to stream passengers from Aer Lingus flights on a low cost, easy connection basis.

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