financial results

Feb 11, 2016

Virgin Australia drops five E-190s, lifts profits as previously announced

While Virgin Australia confirmed the good news of soaring profits in its half yearly results posted this morning, five of its unusually comfortable Embraer E-190s have been chopped.

Ben Sandilands — Editor of Plane Talking

Ben Sandilands

Editor of Plane Talking

[caption id="attachment_59303" align="aligncenter" width="610"]Virgin Australia's CEO John Borghetti delivered a powerful profit boost today Virgin Australia's CEO John Borghetti delivered a powerful profit boost today[/caption] While Virgin Australia confirmed the good news of soaring profits in its half yearly results posted this morning, five of its unusually comfortable Embraer E-190s have been chopped. Virgin Australia CEO John Borghetti said he was pleased to announce the sale of the jets this morning, to continue the 'optimisation' of its fleet. He also announced that the six E-170s he sub leased to Delta more than five years ago have been sold to the US carrier, which has an extensive commercial relationship with Virgin Australia on the trans Pacific and domestic American routes. The E-jets may not be missed by financial analysts, but they are a key product differentiation for Virgin flyers on a range of routes, including  from Canberra, with the most comfortable economy seats in service on Australian domestic services in cabins with no middle seats. At this stage around 13 E-190s will remain in the Virgin Australia fleet, fate uncertain. In its filing to the ASX Virgin Australia Holdings says it incurred $59.4 million of restructuring and transaction costs and impairment losses on assets held for sale in the half year to 31 December as part of the 'broader fleet simplification initiative.' The filing confirmed the figures derived from the earlier announcement of the group's second quarter earnings, making an underlying profit before tax of $81.5 million in the first half of this financial year and increase of $71.3 million compared to the same period a year earlier. The results are notably strong in all metrics and the ASX filing can be read in full here.

Free Trial

Proudly annoying those in power since 2000.

Sign up for a FREE 21-day trial to keep reading and get the best of Crikey straight to your inbox

By starting a free trial, you agree to accept Crikey’s terms and conditions


Leave a comment

13 thoughts on “Virgin Australia drops five E-190s, lifts profits as previously announced

  1. Travel Hound

    Five E190’s!

    Of all the aircraft VA have in their fleet, this is the last type I want to see to get the chop!

    At the end of the day they had to do it! They just didn’t have the passengers to sustain their current fleet numbers.

    From the SMH article they raised ASK yields by 7.1%. Not a bad effort.

    This bodes well for QANTAS. If they can produce a similar number their profits are simply going to be stellar. They already have load factors 3-4% higher than VA and are growing in a declining market.

    Good to see TigerAir is now in profit. Jetstar will have this airline nipping at its heals in the next couple of years.

    All in all, this is good for the Australian flying public. We have never had it so good!

    ….except for those who will have their daily flights changed from E190’s to 737’s.

  2. T M

    That’s a shame, flying from Gold Coast to Sydney I would schedule to get on an E190, will miss them if they pull them from that route.

  3. Damon

    Agreed with the other comments about the E190s, they were comfortable and made a packed flight in Economy a pleasure rather than a chore. Sadly missed by me.

  4. chris turnbull

    I’ve had the pleasure a couple of times (using the bid upgrade option) to fly business class on the 190s and it is true they are an absolute pleasure. But it was an anomalous situation that Qantas has streamlined its domestic fleet to 2 types with Virgin using 3. Eventually the 190s will go. The tiger A320’s will go and be replaced by 738’s. That puts virgin with just 2 types (including the low cost airline). Keeps the costs down – and wasn’t the single type of aircraft the way Virgin Blue made a lot of money in the first place ?

    Only query is the canberra – Sydney . Will this mean a return to the ATR’s for this sector ? Oh no – poor pollies !!

  5. Zarathrusta

    I’m disappointed they are reducing E190s, they are the reason I choose Virgin over an A320 carrier.

    I wish Virgin would bite the bullet and move to A319-321 neos. They are significantly more comfortable than 737s and the only way I can see Virgin increasing their capacity for big routes without going to wide bodies.

    Alternatively they could replace the E190s with CS100 or CS300s. As a consumer I want more modern safety systems. The idea that in an emergency and panic someone is going to get a life raft out of the ceiling and tie it securely to seats and throw it out the door without inflating it in the cabin is not confidence building. And I’m not in the slightest bit scared of flying, I just notice these systems.

  6. Zarathrusta

    It’s also time one of our network airlines got containerised baggage handling.

  7. Rufus

    Not sure that I understand the love for Embraers. I fly them pretty regularly, on jam-packed flights from LCY.

    A completely full flight is unpleasant at the best of times, but it seems even worse when you’re on an Embraer that you feel you can barely stand up in, hugging your cabin bag because it won’t fit into the overhead lockers.

  8. ghostwhowalksnz

    “I wish Virgin would bite the bullet and move to A319-321 neos”
    Thats impossible for a country the size of Australia as the current A320 doesnt have the necessary max range with full payload. Its no coincidence that both Qantas and Virgin use the 737 for the backbone fleet. Indeed Virgins low cost subsidiary Tiger is going to be using 737s for its flights from Adelaide and Melbourne direct to Bali.

  9. Ben Sandilands

    I’m really surprised that you know so little about the history of single aisle jet purchases in Australia, or the absence of a statutory fuel reserve limit that means range is much less important across the continental and Tasmanian network that it is in the developed world.

    At the end of 2001, in the aftermath of the Ansett collapse and 9/11, Qantas needed new capacity in the single aisle category quickly.

    It was in advanced negotiations with Airbus for 60 A320s when James Strong discovered a clause in the commercial agreement between American and Qantas that made bulk fleet purchase prices by the US carrier available to its Australian partner.

    There were numerous interviews about this development including in the NZ press which at the time was not surprisingly interested in what had just happened in relation to Air NZ and Ansett. You seemed to have been out of your country. The price per 737-800 was not just dirt cheap, but American had decided in the aftermath of 9/11 it didn’t need them and Boeing was insisting on the contract being honoured. So Qantas rescued American and American saved Qantas a heap of money and had guaranteed early deliveries to boot.

    The Virgin Blue enterprise borrowed six 737-400s from Richard Branson’s rapidly failing venture in Belgium, which was being managed by Brett Godfrey, who persuaded him to set up shop in Australia versus Qantas and Ansett.

    Had Virgin Express been an A320 operator, Virgin Blue would have started with A320s, or for that matter DC-3s. OK maybe not DC-3s, but they did have a single DC-10.

    Now about range. Your right, the A320 flies a shorter range than a 737-800. But range per se isn’t a factor in this country as the Mildura incident showed, as carriers do not have to carry enough fuel to divert to an alternative airport. I think the reason is that if carriers had to arrive in Perth in either a 737 or A320 from say Melbourne with enough fuel for the nearest suitable alternative, which is often Learmonth, or even Adelaide, they’d never fly the route with that equipment. The rule definitely facilitated Lockheed Electra service to Perth.

    In the US, A320s regularly fly nonstop across a continent around as much as 1000 kms longer in flight routes, and much longer in terms of indirect ATC related routing, than Australia. How is this so? Because arriving at at any of the LA airports usually means carrying legal reserves to divert to dozens of suitable strips tens of minutes away within the greater metropolitan area such as Pasadena or even in the very near next big city of San Diego, or over the Sierra Nevada etc.

    Which brings us to another reason why the A320 has been so successful against the longer ranged 738 (but not it seems after the NEOs and MAXs arrive, both with longer range capabilities.) They have containerised underfloor freight and baggage loading systems. Some airlines claim this saves them as many as two extra employees per jet, others point to shorter better turnaround efficiency.

    The reason Boeing hasn’t eliminated this disadvantage appears to be in the costs of changing the legacy underfloor design and getting them approved.

    There is no doubt the NEOs and MAXs will be good jets, but one lot is going to be better than the other, and judging from the constant hints from Boeing about how it will change the MAXs with new wings and gear, it seems its only current deal winning ploy is to sell cheaper than Airbus.

  10. comet

    Virgin Australia’s lack of containerised freight, and its need to hurl luggage onto overloaded trolleys, is the reason Virgin breaks guitars.

  11. ghostwhowalksnz

    Regarding the A320s flying non stop across US, you will find that they cant do Boston or New York to LA or San Diego with full payload ( and of course headwinds) as well as the 737. I dont read the US newspapers either but pilot forums have referred to A320s doing a refuel in say Phoenix. Of course others just use 737, like United who have A320s as well.

    The Midura incident is concerning but of course they werent flying full fuel as they could have turned around and gone back to Sydney or Melbourne.
    That Qantas buy of the 737-800 was extremely fortunate as the 2001 annual report doesnt mention any new 737 purchases and yet the first of 15 came into service between Jan and Aug 2002.
    Geoff Dixon modestly claims all credit for the short period of 3 months from contract to EIS.

  12. Ken Borough


    I think you will find that carriers must carry a statutory reserve. This may or may not be sufficient to allow diversion to an alternative airport. The carriage of fuel for a near alternate does not necessarily mean a safer operation. For example, a flight destined Sydney has fuel to divert to Richmond. After passing a PNR based on, for example Brisbane, both Sydney and Richmond become shrouded in an unforecast fog and become unsuitable or even unavailable. What good is the diversion fuel in this case? Sometimes events conspire to upset the best of planned apple carts.

  13. Ben Sandilands


    You’re right. I should have said statutory reserves as known in the rest of the first world, or something like that.

Share this article with a friend

Just fill out the fields below and we'll send your friend a link to this article along with a message from you.

Your details

Your friend's details