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VIRGIN AUSTRALIA: Ditching Boeing 737 MAX-10 for smaller MAX-8 models?

VIRGIN AUSTRALIA: Ditching Boeing 737 MAX-10 for smaller MAX-8 models?

The AFR is reporting that Virgin Australia is looking to exercise some of its options to swap orders for the larger Boeing 737 MAX-10 planes for the smaller MAX-8 models. Virgin Australia has ordered 25 of the new 737 MAX 10 aircraft.

Virgin has confirmed that the delivery of the aircraft will be delayed, but not the option swap.

More seats on MAX-10 aircraft

The larger MAX-10 aircraft accommodates around 25 more seats than the MAX-8s (205 v 180) but has a shorter range. The change to the smaller capacity aircraft could affect the economics of popular routes like East Coast Australia to Bali.

Aircraft delivery plans for Virgin Australia were to see a new plane from Boeing arriving each month. Virgin has received four of a total of 14 of the MAX-8s on order arrive, the latest as recently as 13 March. Delays mean that Virgin is not expecting to receive more aircraft until 2025, and then only six of the aircraft. The larger MAX-10s are now not scheduled to arrive until the 2026 financial year. New aircraft are a vital part of the airline’s expansion plans.

The Boeing 737-MAX-10 aircraft still remains to be fully certified, a process that has now been interrupted by the demands of the MAX-9 fix required after a door plug blew out of an Alaska Airlines flight back in January.

a plane parked on a runway
Virgin Australia B737s at Melbourne Airport viewed from the lounge. [Schuetz/2PAXfly]

All Boeing Fleet

Virgin Australia is a little stuck since its fleet is all Boeing. Even if delivery slots were available, a swap to ordering from European manufacturer Airbus would be a radical departure from its current all-boarding fleet acquisition plan. The upside of a one manufacturer fleet plan is the simplification of maintenance and training. The downside, as illustrated here is if anything goes wrong with your chosen manufacturer, you have no alternatives.

Virgin is facing a range of internal problems. Its current CEO, Jayne Hrdlicka, has announced her departure for mid-year. No replacement CEO has been announced. The airline abandoned its plans to list on the Australian Stock Exchange last year and can’t really put that plan back into action until a new CEO is found.

Virgin Australia new interior for the Boeing 737-8 and their new MAX jets [Virgin Australia]
Virgin Australia new interior for the Boeing 737-8 and their new MAX jets [Virgin Australia]

2PAXfly Takeout

The prior version of Virgin Australia pre-pandemic had difficulty making a profit and carried a large debt that went whipped out it when it went into administration. The airline appeared to be back on an even keel, announcing record profits. However, some executive movements and the departure of the current CEO, whether voluntarily or as some commenters have suggested at the request of current owner Bain Capital, bring an undesirable level of uncertainty for potential investors. Consultation with potential investors has indicated that one profit is not a satisfactory indication of continuing financial success. All these staff and aircraft delivery disruptions are not what potential investors want to see either.

Another ASX listing is probably years away. It looks like Bain will hold ownership of this airline for longer than it might have hoped.

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