VIRGIN AUSTRALIA: Increases order for 737 MAX aircraft. Existing aircraft to have interior refresh

Since it came out of administration with new owner Bain Capital, Virgin Australia has run a single-model aircraft operation. The aircraft has been the Boeing 737-800. It will stick with that very efficient single aircraft operation but with some variation. It has already ordered and received three 737 MAX-8s, and the remaining 11 on order are expected to arrive month by month during 2024. That increased order for 737 MAX aircraft will bring the total number of new generation 737s the airline operates to 39.

Fuel Efficiency

The new MAX aircraft provides around a 15% reduction in emissions, contributing to Virgin’s commitment to reduce carbon emissions by 22% on the way to zero emissions by 2050. Admirable, but that target is nearly 30 years away.

The MAX 10 order will provide even more reductions to emissions. Essentially, they will use the same amount of fuel but transport more passengers, resulting in a 17% higher efficiency per seat/mile.

Boeing 737 MAX-10s

Virgin Australia is also adding to its Boeing order with a new variation on the 737, with a greater capacity but slightly more limited range Boeing 737 MAX-10 aircraft. It has a range of 3,300 nautical miles or 6,112 kilometres. That gives it about 450 km less than the 737 MAX-8 at 3,550 nautical miles or 6,575 Kilometers.

This will not make much of a difference on most of the routes on which Virgin operates. However, it does mean that although the MAX-8 could make it to Singapore (6288 km), the MAX-10s won’t.

New Cabins

The new MAXs will arrive with the new Virgin Australia cabins, but Virgin has now announced a refit schedule for its existing Boeing 737s. The AU$110 million refurbishment will commence in the next few days, with the first aircraft scheduled to leave maintenance in Melbourne in the next few weeks, which is early December.

The new cabins feature:

• In-seat power across cabins, Business and Economy class
• New Business Class seats
• New or refreshed Economy seats
• In-flight WiFi and free streamed entertainment to passenger personal devices (seat back screens to be removed)

2PAXfly Takeout

None of these innovations are a surprise, although the diversification of the 737 models is interesting.

The addition of the increased seating possibilities of the MAX-10 indicates that Virgin is confident it will need increased capacity per flight on some routes in the future. Virgin currently seats 176 passengers over three classes (8 x Business; 30 x Economy-X, 138 Economy) in the Boeing 737 MAX-8s.

The MAX-10s sees a potential boost in capacity to between 188 – 204 passengers in two classes or up to 230 in a single-class configuration. I’d expect the new Virgin MAX-10s to reach about 200 seats in its Business, Economy-X, and Economy configurations.

How potential investors will see this expansion when Virgin seeks a listing on the stock exchange will be interesting. On the one hand, access to more efficient and larger aircraft represents the potential for more income and profit. The downside is that there is also a lot of capital hardware on the books that must be paid for either to purchase or lease payments.