Virgin Blue Secures Deal for 50 New Boeing Aircraft

Strategic Insights -

Virgin Blue Holdings Ltd has reached a significant agreement with global aerospace company Boeing to order 50 new aircraft, scheduled for delivery between 2011 and 2017. The new planes, all 737-800s, will augment the airline's short-haul services in Australia, the Pacific, and Asia. This deal provides Virgin Blue with a substantial boost in flexibility, enabling the airline to respond to changing market conditions and pursue future strategic initiatives. The agreement also allows for the retirement of older planes, maintaining a relatively young fleet with an average age of around eight years.

Key Takeaways:

  • Virgin Blue will receive 50 new Boeing 737-800 aircraft between 2011 and 2017, increasing the airline's flexibility in responding to market changes.
  • The new planes will be used for short-haul services in Australia, the Pacific, and Asia, featuring upgraded interiors and offering fuel and maintenance efficiencies.
  • The agreement allows for the retirement of older planes, with a view to maintaining a fleet with an average age of around eight years.
  • The leasing arrangements for 30 Virgin Blue aircraft are due for renewal over the next few years, and the new order represents a potential annual increase in capacity of between zero and 12% over the period.
  • Virgin Blue is also considering the new 737-900 series and has a fleet of 89 planes, with 38 leased and 49 owned as of December 31, 2009.
  • The airline's V Australia subsidiary is due to receive its fifth Boeing 777 in November, while a fleet revamp of Pacific Blue, including the addition of premium economy seats on all services, is expected to be completed by May.
  • Virgin Blue's domestic economy services are also undergoing a facelift in 2010, and the airline has a net profit of A$62.5 million for the six-month period to December 31, 2009.
  • The agreement showcases Boeing's commitment to supporting airlines in the Asia-Pacific region, where the airline is expanding its services.

Statistics:

  • 50: Number of new Boeing 737-800 aircraft ordered by Virgin Blue between 2011 and 2017
  • 2011-2017: Period during which the new aircraft are scheduled for delivery
  • 8 years: Average age of Virgin Blue's fleet, aiming to maintain a relatively young fleet with this agreement
  • 38/49: Number of leased/owned planes in Virgin Blue's fleet as of December 31, 2009
  • A$62.5 million: Net profit for the six months to December 31, 2009
  • 60.08%: Increase in Virgin Blue's profit after tax, compared to the prior corresponding period
  • 61 cents: Closing share price of Virgin Blue, down one cent from the previous day

Sources:

  • "Virgin Blue Secures Deal for 50 New Boeing Aircraft" by Asia Pulse, Feb 24
  • Virgin Blue Holdings Ltd (ASX:VBA)
  • Boeing
  • "Virgin Blue gets boost from new aircraft deal" by AAP, Feb 24
  • "Virgin Blue posts strong six-month result" by AAP, Feb 24