Its been some time coming. Looking at Airbus’ order data, it was 2014 when they last won an A350 order (-900) and 2013 for an A350-1000 order. So a forthcoming announcement from Virgin Atlantic will be most welcome – its expected to an A350 order and, crucially, for the -1000. Reports indicate we can expect an order for a dozen – nine purchases and three on lease.
The fact that Virgin Atlantic is 49% owned by Delta is something to ponder. Clearly the A350-1000 decision was reviewed in Atlanta. Delta placed a big Airbus order in 2014 for A350-900s and A330-900s. Fleet commonality optimizes MRO efficiency.
It makes sense to retire the remaining A340s in the Virgin fleet. The A350-1000 has the capacity to replace 747s; Delta’s A350-900s are replacing its 747s. Reports indicate Virgin Atlantic is also evaluating the 777.
The 777 mention is a two point item.
- Is this a play to ensure the airline gets a compelling offer? Nothing does this better than mentioning the name of a competitor.
- Also Boeing has screaming deals on 777-300ERs; we hear discounts of 60% are possible. Airbus might not be doing that on the A350 anymore now that it has been launched. But, to recover lost ground on the -1000, which has previously seen cancellations, Airbus will be aggressive. Moreover, an A350-1000 deal may be a way to ease out of a previous A380 commitment. Meanwhile if the 777 is being considered, given the replacement time horizon, Virgin can’t be looking at the 777X.
Virgin Atlantic has 11 A340-600s and 10 747-400s. These are fuel burners, but in a low fuel cost environment, pressure to replace them diminishes. The dozen A350-1000s conveniently matches the A340 fleet size. The 747 fleet is being retired faster though. So this could offer Boeing an advantage as they can almost certainly deliver aircraft sooner. Remember Boeing lost a Delta order, in part, because of delivery slots. Boeing’s 777 line needs orders and we think they will do what they need to do to win.
Its a great time to be a buyer. And as we watch the demise of four-engined aircraft at Virgin, we smile thinking about this period just a few years ago. The Super Twins won the war.