Virgin Australia is reluctant to resume long-haul services even as demand for international travel soars, CEO Jayne Hrdlicka said, as the airline seeks to rein in costs and prepares for an initial public offering as soon as next year.
“Anything that we did from a long-haul standpoint would have a very high hurdle on it,” Hrdlicka said in an interview at a CAPA Centre for Aviation conference in Adelaide. The airline said in a filing Wednesday that it may consider a return to long haul at some point.
“There is a lot of demand right now for long-haul flying and not enough capacity, but you have to plan for the long term. You don’t invest significant amounts of capital in aircraft to solve for a moment in time,” the CEO said.
Hrdlicka anticipates that Virgin Australia will return to profit in the year ending June 2023, laying the ground for a share sale – possibly next year – and at least a partial exit by the airline’s owner, US buyout firm Bain Capital.
After collapsing under a mountain of debt at the start of the pandemic, Virgin Australia is now focused on keeping hold of one-third of the domestic passenger market and short-haul flights to destinations such as New Zealand.
“We’re very focused on running the business and making sure that we’re in great form for eventual listing,” Hrdlicka said.
Bain Capital ditched Virgin’s long-range Boeing 777 and Airbus A330 jets under a sweeping ‘rescue, rightsize and reboot’ plan which saw the airline focus almost exclusively – and, arguably, so far very successfully – on the domestic market.
Partners fill the gap
Partner United Airlines is now filling the Australia-US gap, with flights from Sydney and Melbourne to Los Angeles and San Francisco, along with Brisbane to San Francisco and Sydney to Houston.
United also offers an extensive network of connecting flights through what the carrier terms its ‘triple gateways’ of Los Angeles, San Francisco and Houston, with a one-stop service to other points on the United network.
“That all gives Virgin customers much more travel via one stop to virtually anywhere in North or South America because of United's vast network, they’re not having to double- connect or even triple-connect,” the airline’s senior vice president of international network and alliances, Patrick Quayle, tells Executive Traveller.
“It’s a real win for Virgin.”
Virgin also lacks aircraft suitable for resuming flights between Brisbane to Tokyo, the March 28 2020 launch of which was scrapped due to the pandemic.
The airline is expected to lean on partner ANA when Japan fully reopens to tourists, which is now tipped to happen by November.
Long-range jets a long way away?
Virgin has always insisted that it would resume long-range international flying when demand on its key routes returned, saying "long-haul international operations are an important part of the Virgin Australia business" but would not resume until the global travel market recovered – a process which remains in its early stages.
“We are really looking forward to restarting (long-haul international flying) with a principal focus on Japan and the USA,” CEO Jayne Hrdlicka remarked in April 2021.
In September 2021 s Virgin Australia spokesman told Executive Traveller “we remain in discussions with aircraft manufacturers on a fleet strategy to support the reintroduction of widebody services when long-haul international travel demand returns.”
Former Virgin Australia CEO Paul Scurrah, who helped steer the airline out of administration in 2020 before Hrdlicka took the stick, had previously launched a “widebody fleet review” with the aim of replacing the A330 and B777 with a single aircraft type – either the Airbus A350 or the Boeing 787 – citing “significant cost savings available from next-generation aircraft.”
“We did a lot of work pre-administration on replacing both those aircraft types with a more efficient, newer version of a wide-body,” Scurrah elaborated at a media briefing in August 2020.
“We are having discussions with aircraft manufacturers but there's also going to be leasing opportunities for us, and it might be that we go straight to the end solution or we might have a temporary lease solution” he allowed at the time.
Additional reporting by Bloomberg