Virgin Blue signs major aircraft deal

[Kurt A]

Thursday 1 April 2010, Brisbane, Australia: Virgin Blue Group confirms it has just formally signed an agreement with aircraft manufacturer Boeing, for up to 105 brand new 737 aircraft.

This consummates the in-principle agreement, which was signalled at the recent half year financial results briefing. The transaction has been in negotiation for nine months and its completion constitutes the biggest aircraft order in Virgin Blue’s ten year history and the Boeing Aircraft Company’s largest order in the past 18 months.

The agreement includes 50 firm B737-800NG aircraft (with flexibilityto convert to either B737-700or B737-900), 25 additional firm delivery positions secured as options and 30 future purchase rights. Delivery is scheduled from June 2011 through to 2017 and delivery options negotiated will provide important flexibility to manage movements in market conditions, to aggressively ensure market share is not eroded and to provide additional growth options at Virgin Blue’s discretion.

A significant percentage of the aircraft is intended for replacement of the existing narrow body fleet, while the remainder will be deployed to new routes and to boost frequency where demand dictates.

Virgin Blue Chief Executive, Brett Godfrey, said, “Securing this agreement now places Virgin Blue in a strong position to prepare for steady future growth as domestic and short haul markets recover. It will also ensure a turnover of aircraft to maintain the youngest fleet of modern aircraft which is crucial for maintaining our commitment to on-time performance and the lowest cost base possible.”

The new aircraft order will deliver a further reduction in operating costs to manage the airline’s future cost base, maximise reliability and continue to bring to market modern airline products and services. The deal includes aircraft with the latest technology under the Boeing Performance Improvement Plan, which will also help the carrier maintain its commitment to reducing its carbon footprint, via initiatives including engine improvement and enhanced aerodynamics. The aircraft will be delivered with Boeing’s new sky interiors with inclusions such as newly designed seats and IFE which will complement Virgin Blue’s ‘Airline of the Future’ initiative to be rolled out during 2011.

Brett Godfrey added, “Virgin Blue was fortunate to see the opportunity and be in a position to take advantage, of the downturn in the market as we did back in 2001, to secure long term future supply of aircraft on attractive commercial terms. Pricing cannot be disclosed but importantly net pricing is improved from 2001 levels, allowing for a lowering of the fleet’s cost base. We expect to finalise our funding arrangements for these aircraft shortly.”

-dj

[Andrew M]

Very glad they are going with the "Sky Interior"

This will finally bring the B737 up to and probably in-front of the A320 interiors which are much nicer

[Will H]

Surprised the 737-900ER was left out of firm purchases after all the talk (http://www.flightglobal.com/blogs/wings-down-under/2010/04/wheres-the--900er-in-virgins-50-737-order.html).

But perhaps the 739 demonstrator, (http://yssyforum.net/board/showthread.php?t=5063) if correct, will make some conversions occur.

[Steve Grayson]

The -900 is still out there as dorment order.. On top of that I have found out that the only reason the T7 was not ordered for Dom Ops was the inability of SYD, BNE and MEL Dom Terminals to accept their large footprints. IATA says the T7 will take up 2.4 of their bays and they are not willing to change for us.
DJ is now looking at an infill of an 767/A330 size a/c to allow is to fly 250 ish pax on our trunk routes...
One last update from the Coffee Club is that we are ramping up to have about 140 a/c by 2015 ad onwards to 180 by 2017:eek:
It's gonna get busy.....:p

[Arthur T]

The statement by Virgin Blue also states about their committment to have new seats and IFE on board their aircraft. I just wondering whether they will follow suit of their sister Airline Virgin America to introduce Panasonic eX2 touch screen with an in seat ordering system.

They may become a major threat to Qantas for its new interior and hope Qantas can do something to renew their Boeing 737 Fleet and even get some new aircrafts to replace B763ER before it is too late.

[Nigel C]

Renew the Qantas B737 fleet??? Had you not noticed that 95% of their fleet is already NG gear???

And just what is the issue with the B767 fleet that any delay in their replacement might make it 'too late'?

[Ash W]

Fleet and even get some new aircrafts to replace B763ER before it is too late.

They have the 7late7's on order to replace the 767's.

[Nigel C]

The -900 is still out there as dorment order.. On top of that I have found out that the only reason the T7 was not ordered for Dom Ops was the inability of SYD, BNE and MEL Dom Terminals to accept their large footprints.

You could bung a B772 on Bay 49 at T2 at YSSY, but it would probably take out Bay 51. It used to take B743's when Ansett was around, and I think the NIGs and lead-in line are still in place.

[Gareth U]

Qantas has used Gate 43 for SYD-CNS flights on the 742, post AN collapse.

[Nigel C]

Gate 43? It used to be called Bay 11 during Ansetts days

[Tony G]

Nothing against airbus, however it is good to see that they stuck with the 737s. Just to keep up the variety of aircraft in Australia to choose from.

[Tony G]

Would be good if they followed the Braniff/Court idea as well, the current colour scheme has got me singing Split enz:p. If your under 30 I do not expect you to understand this post :-) .

[Will H]

The -900 is still out there as dorment order.. On top of that I have found out that the only reason the T7 was not ordered for Dom Ops was the inability of SYD, BNE and MEL Dom Terminals to accept their large footprints. IATA says the T7 will take up 2.4 of their bays and they are not willing to change for us.
DJ is now looking at an infill of an 767/A330 size a/c to allow is to fly 250 ish pax on our trunk routes...
One last update from the Coffee Club is that we are ramping up to have about 140 a/c by 2015 ad onwards to 180 by 2017:eek:
It's gonna get busy.....:p

Had the 777 order eventuated, that would have raised a number of interesting questions: have a dedicated domestic fleet (in which case buy old -200As or -300As at good prices or buy new jets)? or interchange the a/c with V, in which case the a/c would be premium heavy for domestic routes.

The 767/330 need is a quandary. I don't see DJ going to Airbus, yet Boeing can't offer much with the 767 at the end of its life and the 787-3 all but nixed.

You can get 215 pax in a single-class config in the 739ER. Are 35 more seats worth introducing a new type of a/c?

[Jarden S]

Will they keep the E-jets or they get replaced with new 737s

[Andrew M]

Interesting that the A330 is mentioned, yet again!

Can't really see them going down that path, just get the 737-900ER :)

[Raymond Rowe]

They are probably looking a twin aisle much quicker loading and unloading

[lloyd fox]

The problem is Sydney parking gate availability and slots as they grow.2x A330 flights will replace 3x 737 flights etc.

[Will H]

Interesting that the A330 is mentioned, yet again!

Can't really see them going down that path, just get the 737-900ER :)

[Godfrey] says there's even a business case for expanding into mid-haul aircraft such as Airbus A330s or Boeing 787s.
http://www.theaustralian.com.au/business/virgin-chief-ready-for-take-off-as-he-leave-trhe-airline-he-founded/story-e6frg8zx-1225835355948

The problem is Sydney parking gate availability and slots as they grow.2x A330 flights will replace 3x 737 flights etc.

Wouldn't that only be for parking, not slots?

[Nigel C]

What about if you removed Bravo-4 and extended the eastern T2 terminal finger southwards to enable 2 or 4 larger aircraft bays at the far southern end, depending on whether you kept Bays 39 and 40 for Code C aircraft or made them Code E capable?

[Arthur T]

Re Nigel:

Renewing Qantas' Boeing 737 Fleet does not mean getting new planes to replace them, but I mean they should have their interior refurnished to install AVOD and a more comfortable seating.

Furthermore, Qantas should stop waiting for those 7Late7s and consider other options including to order 20 B77E to replace B76W, where these B77Es can be deployed to more European or ex-NZ Transpacific service and to replace some early A333s in the future. I think if QF can order these B77Es they can come within a year or two, which they will be fitted with new product and should be able to beat Virgin Blue.

[Ash W]

Arthur on the one hand you want the 767's replaced but then say put the new aircraft on routes to Europe and to replace 'early A333s'. That doesn't make sense.

Not sure if you have noticed but the bulk of the 767's operate domestic flights, where the 787 even if it is very late is the ideal replacement. The A332 proved to be too big, so 777's being even bigger also wouldn't work. As for the A333's what exactly is wrong with them? They are newish, have AVOD, what more do you want?

As for routes to other Europe Qantas has already made it clear that Jetstar with their 787's are the way forward on these routes.

[Matt Coughran]

according to Boeing's website, Virgin Blue have committed to 40 737's at the moment.

http://active.boeing.com/commercial/orders/index.cfm

So will be interesting to see where the other orders end up or when they are added onto the site!

Cheers
Matt

[lloyd fox]

Yes Will, mainly parking but slots will become a issue over the next decade if the 80 per hour cap is maintained.Airlines will still need to increase flights at the peak times.

Cheers Lloyd

[Dave Dale]

Would Virgin Blue ever consider the 737-600 for routes like BNE-ROK/MKY?

[Gareth U]

No. Absolutely not. Both the Embraer fleet and the 73W/G (for peak times) cover these routes well.

I cannot think of any network airline in the world that would benefit from adding the 736 to the fleet. Even for a niche carrier, I would say the 736 would only be beneficial due to lower acquisition costs for a second hand model over other types of similar performance.

[Mike W]

There's pertinent piece of Fleetbuzz Editorial on how significant this order is relative to the whole narrow body Airliner Market and attempts by Bombardier to crash the party.

Taken from the Editorial While the Virgin Blue 737 order was one that was all but guaranteed for Boeing this year, it also highlights a couple of other decidedly important issues.
Firstly, its that demand for the present crop of A320/737 jets continues unabated - with better access to financing and credit, its is only a matter of time before Boeing emulates Airbus’ moves to increase production of the 737 to between 34 or 35 units per month, representing 8%-10% growth on current output.

More here;

http://www.fleetbuzzeditorial.com/

[Mark D]

Yes Will, mainly parking but slots will become a issue over the next decade if the 80 per hour cap is maintained.
I would be AMAZED if the 80/hr cap ever changed... too many political agendae there...
A second airport will happen before the 80/hr cap goes.

[Arthur T]

I believe at first the additional B737s can turn E170s and E190s away from Inter-state capital (eg. SYD - MEL) service and put them back into much-needed regional routes, such as Sydney - Newcastle, Sydney - Bathurst, Sydney - Wagga Wagga, Sydney - Armidale, Sydney - Wollongong, Sydney - Orange, Sydney - Dubbo, Sydney - Broken Hill, Melbourne - Horsham, Melbourne - Avalon (Geelong), Adelaide - Olympic Dam, Adelaide - Kingscote, Adelaide - Port Augusta etc

Furthermore, they can be put onto launch hubs such as Alice Springs, Uluru etc. And they can be used to launch international routes ex-Cairns and ex-Darwin such as Darwin - Singapore, Darwin - Hong Kong, Darwin - Bangkok, Cairns - Singapore, Cairns - Hong Kong, Cairns - Canton etc.

[Zac M]

I believe at first the additional B737s can turn E170s and E190s away from Inter-state capital (eg. SYD - MEL) service and put them back into much-needed regional routes, such as Sydney - Wollongong, Melbourne - Avalon (Geelong),


They would never even dream of operating these routs, they would just be a waste of fuel!

[Ash W]

IMelbourne - Horsham, Melbourne - Avalon (Geelong)

I wish to god I had some of what you are smoking. I mean to say you are suggesting a Melbourne-Avalon service. It would be quicker to drive it.

[Nigel C]

Perhaps I need to start a "most forgettable quotes" thread...

[Ryan Hothersall]

I know most of those airports in SA like Olympic Dam, Port Augusta, Kingscote etc cannot take jet aircraft of E Jet size.

I doubt those airports will be upgraded in the foreseeable future.

[Will H]

There's pertinent piece of Fleetbuzz Editorial on how significant this order is relative to the whole narrow body Airliner Market and attempts by Bombardier to crash the party.

DJ's order and the CSeries are unrelated. DJ 1) needs new a/c starting next year and 2) wouldn't want to introduce a new type with fewer seats than the 737. Heck, we're debating DJ adding the -900ER and a wide-body. Talk of the CSeries is going in the wrong direction.

As for airlines still being dependent on the existing 737 and 320, they are dependent because they have to be. There's no alternative. For DJ it's either order these 737s (with marginal improvements) or renew leases on its existing and old aircraft that will require costly maintenance.

By the time a next-gen 737 or 320 comes online, it could very well be fleet renewal time again for DJ.

The rest of the article--the viability of the CSeries--is a separate conversation worth having but not here.

[Jason Carruthers]

put them back into much-needed regional routes, such as Sydney - Newcastle, Sydney - Bathurst, Sydney - Wagga Wagga, Sydney - Armadale, Sydney - Wollongong, Sydney - Orange, Sydney - Dubbo, Sydney - Broken Hill, Melbourne - Horsham, Melbourne - Avalon (Geelong), Adelaide - Olympic Dam, Adelaide - Kingscote, Adelaide - Port Augusta etc

Of the city pairs you list the only market I can see DJ entering is Wagga Wagga the rest are either too close together or too small for a E70.

However I somewhat agree with the second half of your post regarding DRW. I think DJ could start DRW-SYD/ADL/DPS/SIN with the extra 73H.

[Damian N]

I suspect that planning for-900 introduction is well under way but not too much point in telegraphing this to Qantas/Jetstar so the -900s are announced undercover as -800s with an "ability to covert to -700/900".

[Will H]

according to Boeing's website, Virgin Blue have committed to 40 737's at the moment.

http://active.boeing.com/commercial/orders/index.cfm

So will be interesting to see where the other orders end up or when they are added onto the site!

ATW (http://www.atwonline.com/news/story.html?storyID=19895) has the explanation:
Boeing listed just 40 of the 50 aircraft on its Orders and Deliveries website. A Boeing spokesperson told ATWOnline that the remaining 10 can be cancelled without penalty, "and as such, Boeing cannot count them as firm orders."

I suspect that planning for-900 introduction is well under way but not too much point in telegraphing this to Qantas/Jetstar so the -900s are announced undercover as -800s with an "ability to covert to -700/900".

I think QF knows very well what DJ is up to and vice-versa.

As has been suggested elsewhere on this board, DJ may still be considering the turn-around time of the 739ER.

[AdamB]

Sydney - Wollongong, Melbourne - Avalon (Geelong)

I had to check the date on your post to make sure this wasn't an april fools joke. You can't seriously be suggesting going through all that is involved in checking in & boarding a flight when it would take no more than 40 minutes to drive there. And just how much would you be prepared to pay for this 5 minute flight compared to the $15 in fuel or $8 train ticket?:rolleyes:

[Anthony T]

Sharp Airlines used to do Essendon-Avalon on the way to Portland / Hamilton.
I think it has now been de-linked.

Cheers
Anthony T

[Paul f.]

Melbourne - Avalon (Geelong),Melbourne-Avalon are you for real:confused:

[Matt_L]

Lol-

apparently SIA want to put the A380 on London City too- and Arthur will be the first to fly it.

haha

[Nigel C]

I believe at first the additional B737s can turn E170s and E190s away from Inter-state capital (eg. SYD - MEL) service and put them back into much-needed regional routes, such as Sydney - Newcastle, Sydney - Bathurst, Sydney - Wollongong, Sydney - Orange, Melbourne - Avalon (Geelong), Adelaide - Port Augusta etc


I can't believe the likes of Rex, Q-Link and Aeropelican haven't already jumped to the chance of buying/leasing E170's and servicing these routes with bigger equipment. Just what are their bean counters doing with their spare time????

Furthermore, I think you're onto something here Arthur T...the maintenance costs of E170/190's would plummet by servicing these routes, as they could let the pressurisation system do nothing and fly these routes at or below 10000'. Less pressurisation cycles on the airframe is surely better for their resale value too???

For both airline and customer it seems like a win-win to me! Hell, I could even fly to work!

[Paul f.]

Nigel,most of the flights that these airlines operate are only about 1 and a half hour flying time at the most which makes the SAAB 340, Dash 8 etc perfect for this operation, a jet would be uneconomical with the short distance and small loads.

[Michael Mak]

a jet would be uneconomical with the short distance and small loads.
I think Nigel was being sarcastic ;)

[Dave Dale]

Virgin Blue has ordered one more B737-800 this week taking their aircraft orders at Boeing from 40 to 41 for this year. Total to be delivered (according to Boeing) is 59 737-800's.

[steve k]

I know most of those airports in SA like Olympic Dam, Port Augusta, Kingscote etc cannot take jet aircraft of E Jet size.

I doubt those airports will be upgraded in the foreseeable future.

Alliance has landed Fokker 100's at Port Augusta a few times in the past, cant see why a E170/190 could not land or take off there.