Although no price has been disclosed Virgin Blue has inked a deal for up to 105 new Boeing 737s that would on current prices probably be worth between $US 4.4-5 billion, or maybe twice as much at catalogue values.
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 flexibility to convert to either B737-700 or 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.
There is some interesting fine print in the announcement, especially considering it has about 58 Boeing 737s in service today, give or take the churning that has seen the company turn over enough jets since it began flying in 2000 to keep its fleet age young enough to avoid significant mature jet maintenance costs.
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.
With deliveries stretching out to 2017, the replacement and expansion cycles Virgin Blue is planning will clearly get the benefit of the new LEAP-X engine technology current under development by CFM.
Virgin Blue has already signalled that it is planning further expansion of the long haul Boeing 777 fleet for V Australia as well as additional Embraer 190s, but has maintained a delphic silence as to whether or not it will ever pick up 72 seat turbo-props to serve very short regional routes here or in New Zealand.