Virgin Atlantic Pushes Back Airbus A380 as Plan Uncertain
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Virgin Atlantic Airways Ltd. has delayed taking delivery of six A380 superjumbos ordered from Airbus SAS (EAD) more than a decade ago as the U.K. carrier evaluates whether it still requires the world’s largest jetliner.
Virgin Atlantic, which placed a contract for the double-deckers in 2000, has “deferred them yet again,” with the first delivery now due in 2018 rather than 2017, Chief Executive Officer Craig Kreeger said in London.
One of the first carriers to order the A380, Crawley, England-based Virgin was originally due to take the model in 2006. While delivery dates slipped after program delays at Airbus, Virgin itself put back service entry as the global economy slumped and the carrier mulled its own business model.
“It’s hard but not impossible to see a world where we want to take the aircraft,” Kreeger said in response to questions at the Royal Aeronautical Society. “It’s not a clear choice.”
While airlines are looking to new planes such as the A380 to reduce fuel consumption, the superjumbo may be better suited to operators with extensive hub systems -- such as Dubai-based Emirates, the biggest customer -- than carriers such as Virgin which generally rely on passengers traveling point-to-point.
Kreeger, who took over as CEO on Feb. 1, said Virgin is focused more on the introduction of Boeing Co. (BA)’s 787, with the first of 16 Dreamliner aircraft due in September 2014.
The carrier is in close contact with the U.S. company over operating problems with the model, which was grounded for three months earlier this year following battery glitches and which is currently undergoing investigation after a fire on an Ethiopian Airways Enterprise jet at London Heathrow on July 12.
“We can’t ignore the technical issues Boeing has faced,” Kreeger said, while adding that any remaining glitches will have been ironed out by the time Virgin gets the plane. With the carrier taking the larger 787-9, the problems with the baseline 787-8 have had no impact on the delivery schedule, he said.
Speaking after Heathrow made its case for enlargement in the face of plans from Mayor Boris Johnson to demolish the hub and construct a new one in a less built up area, Kreeger said his preference would be for growth at the current location.
Should Heathrow be closed or not allowed to expand, growth should still be focused on a single hub, and at “an existing airport rather than building one from scratch,” he said.
The Virgin chief, who is pursuing a turnaround plan for the unprofitable company aimed at reviving earnings by spring 2015, said he has held discussions with Howard Davies, who leads a state-appointed commission on U.K. airport capacity.
Regulatory approval for an antitrust-immune joint venture with Delta Air Lines Inc. (DAL), which holds a 49 percent stake in Virgin, should be received before the year’s end, he reiterated.
Code-shares that began July 2 will boost the U.K. company’s North American network and lift sales by tapping Delta ties to travel agents and corporate booking organizations, Kreeger said, with Virgin aiming to pare its reliance on a flat U.K. market.
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