Virgin Australia will weigh up the Airbus A350 and Boeing 787 Dreamliner as its twin-aisle flagship for transcontinental and international flights, with the airline confirming a "widebody fleet review" during today's presentation of its June-December 2019 financial results.
In a nod to the tide of red ink which continues to lap at Virgin's heels, the airline called out the "significant cost savings available from next-generation aircraft."
“We are doing an exploration at the moment,” Virgin Australia CEO Paul Scurrah said. “If the deal is worth doing we absolutely want to do one this year, but it is too early to speculate.”
Airbus and Boeing are both in the mix for what's understood to be a single jet to replace Virgin's current mix of Airbus A330s and Boeing 777-300ERs.
While a less prestigious contest than Qantas' Project Sunrise, which settled on the Airbus A350-1000, Virgin's order would be for at least 11 jets if the current fleet is matched on a like-for-like basis.
All six of Virgin's Airbus A330s, which dominate the nation's east-west corridor and will also fly the new Brisbane-Tokyo route from March 29, are leased. Four of the five Boeing 777s which serve Los Angeles from Sydney, Melbourne and Brisbane are owned, with one under lease.
Cost savings are the driving force
Former Virgin Australia CEO John Borghetti had many times stressed that there was no need to rush this replacement, especially given the fleet's relatively young age: the A330s rolled Virgin's hangars between 2012 and 2014, while the Boeing 777s arrived across 2009-2010.
“As we talk about widebody replacements, and when we do it and what we replace them with, that’s really a long way away,” Borghetti noted two years ago, following the airline's results presentation for July-December 2017. “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.”
Scurrah, who replaced Borghetti in March 2019 and is now about to notch up his first year in the corner office, is expected to align with the airline's preference for a single aircraft for east-west, Asian and US routes, as this lowers overall operating costs.
Airbus vs Boeing (again)
Scurrah has already committed to switching Virgin's low-cost domestic arm Tigerair from the Airbus A320 to the Boeing 737 – the same workhorse as Virgin's domestic and short-range international fleet – by October 2020, a move the airline described as "delivering cost savings and improved operating performance."
Virgin's "widebody fleet review" would primarily pit the Airbus A350 against the Boeing 787.
There's more of a question mark over the delayed Boeing 777-9, with launch customer Emirates not expecting to pick up the keys to its first Boeing 777-9 until close to the middle of 2021, while many other airlines – among them Lufthansa, ANA, British Airways, Cathay Pacific, Qatar Airways and Singapore Airlines – lined up in the queue behind the Gulf colossus.
The capacity of Boeing's big twin-engine jet could also prove too large for Virgin's unique mix of routes, which stretches from 4-5 hour cross-country dashes to the 12-14 hour trans-Pacific trek.