Virgin Orders 50x 737s, But Where’s The -900ER?

DJ 738.jpgA 737-800 takes off from Melbourne Tullamarine. (Photo: Will Horton)

Whatever April Fool’s pranks punters come up with–787 in-flight restaurant, hologram IFE–Boeing can relax knowing it has today signed an agreement with Virgin Blue for 50 B737-800s with 25 options and 30 purchase rights for delivery from next year until 2017.

The order is the largest in Virgin Blue’s history and the largest for Boeing in the past 18 months, a statement from the carrier says. While Virgin Blue declined to put a value on the order, at Boeing’s list prices the 50 firm orders are worth approximately US $3.8 billion. Heavy discounts are expected, of course.

This purchase will more than double Boeing’s year-to-date orders, but Boeing would certainly be happier if Virgin ordered the comparatively lacklustre -900ER variant of the 737 family. While today’s deal leaves the -900ER out of firm orders, Virgin says its agreement with Boeing allows it to convert its firmed -800s to -700s or -900[ER]s.

Over the past few months Virgin had strongly hinted it would order the -900ER. Last December CEO Brett Godfrey said, “The -900 holds some appeal, at the right price obviously.”

In February at the carrier’s half-year results, when an in-principle agreement had been reached, Godfrey said Virgin was interested in the -900ER variant as it would provide more capacity out of slot-restricted Sydney and has a 2-3% lower operating cost per seat.

The -900ER can seat 25 more passengers in a single-class configuration than the Boeing 737-800, the next largest aircraft in the 737 family. Low-cost competitor Jetstar, owned by Qantas Airways, operates Airbus A320 and A321 aircraft domestically. The A321 has a similar capacity and range as the -900ER. Qantas operates widebody aircraft on some domestic routes, including out of Sydney. In late 2014 Qantas is due to introduce 787s on domestic routes, further pushing Virgin to have a larger aircraft on popular routes affected by slot control.

The aircraft purchased under today’s deal will be feature fuel saving improvements and will be delivered with Boeing’s Sky Interior, which includes newly designed seats and IFE that will coincide with Virgin’s “Airline of the Future” concept to be rolled out next year, the carrier says. But there’s no indication if the first of these new aircraft will be the first aircraft to take part in Virgin’s Airline of the Future.

The carrier says a “significant percentage” of the new aircraft are to replace existing aircraft. Many of the carrier’s -700s and -800s (the only type of 737s it operates) are coming off their leases and will soon require increased maintenance. Older aircraft, starting at approximately ten years, are more likely to develop costly structural and other issues where fixing the problem is more expensive in the long run than replacing the aircraft with a new one.

Virgin first revealed last September it was looking to order more 737s.


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