http://www.iht.com, LONDON: Virgin Atlantic Airways plans to purchase as many as 26 Airbus planes worth $5.5 billion, which would double the company's fleet, as it continues its efforts to surpass its main rival British Airways, the company's chairman, Sir Richard Branson, said Thursday.
Virgin would “like to fly every route British Airways flies, and in the next five to seven years we plan to fill the gaps,” Branson said at a news conference held in the backyard garden of his west London home.
The company has ordered 13 new A340-600 aircraft, which seat 306 passengers, and has options for another 13 planes, to be delivered between 2006 and 2008.
The deal is a blow for Boeing, which was competing fiercely for Virgin's order. Branson said that Airbus offered a “terrific deal,” and that some Virgin passengers preferred to fly on four-engine aircraft rather than those with two engines.
Boeing's competing plane, the 777, has only two engines.
Branson also said during the briefing that Virgin was one of two airlines speaking to the Nigerian government about setting up a local airline there. Nigeria “should have a powerful local carrier,” he said, and Virgin is on the “shortlist.”
Virgin plans to use the first of its new planes to fly Australian and Carribbean routes. The company plans to add 6,000 jobs as it expands.
Virgin had previously ordered six of Airbus's huge A380 planes, which seat more than 500 passengers, but delayed delivery of those planes in May for 18 months.
Analysts said Thursday that Branson was making an aggressive bet, given the uncertain future for European airlines.
“If you look at the near-term economic outlook, it is mixed,” said Chris Tarry, an independent airline analyst. Oil prices of $40 a barrel and above are squeezing airline profit margins overall, Tarry said.
But he added that some individual airlines were making profits, depending on what routes they were offering.
On Wednesday, the low-fare Irish carrier Ryanair said profit rose 30 percent in its latest quarter, but that revenue per passenger fell 6 percent. Ryanair's chief executive, Michael O'Leary, warned investors that tough conditions would continue.
Virgin's new deal represents “a big increase in capacity,” said Chris Avery, an airline analyst with J.P. Morgan Chase in London.
But he added that Virgin was based in one of the “most vibrant aviation markets and, over the course of five years, that market is going to expand.” London is seen as the logical hub for some long-haul flights to and from India and China.
“It's ambitious, but up till now it has paid to be ambitious if you are Virgin Atlantic,” Avery said.
3 billion to supply engines to Virgin Atlantic, Bloomberg News reported from London.
Rolls-Royce will supply Trent 500 engines for 26 Airbus A340-600 planes being bought by Virgin Atlantic, said Martin Johnson, a spokesman for Rolls-Royce. The order “represents well over 100 engines,” he said.
Rolls-Royce is the only company that supplies engines for the A340-600. Virgin currently operates seven Rolls-powered A340-600s from an earlier order for 12 of the planes, Johnson said.
The airline has also selected Rolls-Royce's Trent 900 engines to power its planned purchase of A380 planes, he said.
