Virgin Australia eyes Airbus A350, Boeing 787 for next-gen fleet

Totally agree - this feels like Boeing's order to lose. 787-9 seems to slot in nicely for LA/Asia with options for growth down the line using -10 models in the Asian market (or maybe a future ER model that could stretch to the US West Coast) and potentially some -8 if they want a bit more flexibility.

Considering Scurrah himself has singled LAX and the Delta partnership as one of the few (if not only) jewels actually making money for VA's small international network, closing international isn't very likely to happen anytime soon.

Taking into consideration that all major shareholders (including SQ/EY/HNA) have looked at selling out of VA at a loss, it opens the opportunities for the likes of DL or NH consider to have a go where SQ/EY/HNA (and NZ before them) had failed.

For that suggestion to happen, a takeover is required to occur, which isn't likely to happen anytime soon.

With HNA soon to exit through liquidation, EY and SQ looking at selling out of VA, VA exiting International isn't likely to occur for the foreseeable future.

As argued previously, there is room for niche operations where it's supported by joint-venture business such as DL.

SQ looking to sell it's stake!? Highly unlikely. Where's your source?

SMH - February 14 (Author: Kylar Loussikan) had summarised that all 4 major shareholders (including SQ) had looked at selling out of VA at a loss.

Also the SIA group's financial reports (freely available to the public) clearly state that they were making a loss from their VA investment, and had not offered any excuses in that report. That suggests that SQ has had enough.

The "so called messiah SQ" should not be taken seriously as "VA's" rescuer. There has been rumours of a "SQ purchase/takeover" of VA every year and it's been "fake news" in every article for the past 5 years.

There's a better chance of a DL or NH takeover of VA then with the "so-called messiah" SQ, and that scenario isn't likely to happen either.

That article simply makes reference to speculation about the 4 shareholders selling their stake. Nowhere does it state that any of them 'looked at selling out'.

... and, 'Summarised' -v- 'surmised' - there is a difference, in both meaning and authority. The latter being to assume something is true without having the evidence to prove it. I have surmised, Dan, that the auto-correct function got the better of your device. :-)

Can I introduce you to leasing? I don't think anyone expects an outright purchase.

Signing on the lease aircraft still requires the capital commitment of purchasing equipment, parts and maintenance etc. Things don't just materialise from thin air. Crew need to be trained and will have downtime not being able to fly. It's not cheap to introduce a new aircraft type.

They just spent a heap of money buying out the stake in velocity they sold not long ago. They also are still paying off ATRs sitting around doing nothing. Not to mention the cost of breaking Ejet leases early.

Virgin need to stop getting complicating their fleet mixture and finally sort their stuff out. All they've done is lost money for almost a decade since they became VA (there was one or two good halves from memory).

"Virgin need to stop getting complicating their fleet mixture and finally sort their stuff out."

Maybe read the article?

Indeed I did. If VA are considering aircraft on an A350 size (so equivalent 787-9/10), then that aircraft is far too large for domestic and trans tasman services. It would be a big capacity increase on their HK (soon to be defunct) and impending Tokyo flights. ATRs also don't serve them well for anything other than CBR right now.

Committing to a new aircraft type prior to leases ending or having a plan to transition assets like the 777 out of the fleet is adding to fleet complexity.

The current problem for VA is that while it is arguably a cheap time to get new planes, it is a terrible time to get rid of theirs.

You seem to have missed the comments about "early- to mid-2020s, we will probably look at changing those when the leases coincide for replacement" and "the airline's preference for a single aircraft for east-west, Asian and US routes, as this lowers overall operating costs".

Getting rid of leased aircraft is the problem and risk of the Lessor, not the Lessee (aka Virgin Australia). And if the aircraft being 'retired' are from the same manufacturer as the replacements being acquired ... as was once sung: "dirty deal$ done dirt cheap". :-)

Ummm because they wanna stop losing money...?

Nearly everyone is losing money now due to coronavirus but were SQ really losing money before that happened??

Why are SQ loosing by holding Virgin Australia shares?

They bought shares and aren't pouring any cash into VA.

SQ will only loose money if they sell their shares at a lower amount than they bought them as.

Due to accounting, they can put some lines in their profit and loss to appear to reflect a valuation loss on investment. Though in turn they reap some financial benefits such as paying less tax.

In addition to the share price falling, The so called 'messiah' SQ has been more of a hindrance to VA than a benefit.

SQ in cahoots with EY and Borghetti all share most of the reresponsibility for the CAPEX blowouts over the years with little return. The capacity war (which NZ should also share some responsibility for) is just the sprinkling on the cake.

Cute. In light of the current economic situation, I'm sure SQ has money to burn... at some point in time even a strategic asset has its limits in worthiness after losing a ton of money.

Considering SIA has been up front in their financial reports by clearly stating VA has been losing them money overall, and NOT been offering excuses in the financial reports, this suggests that even SQ has had enough.

The fact that SIA has been investing in India's Vistara (also a money losing op) by buying planes for them also suggests VA is NOT a priority for SQ.

Don't be surprised if SQ does formally announce that they're looking at selling out of VA.

SQ owns 49% of Vistara and has effective management control. It is not the same as its VA's shareholding. Your comment that they have been looking to sell upthread has morphed into a belief by you that they may look to sell.

Well said. Asians will happily play a long-game, or spend to keep others down.

SQ had plenty of opportunities to buy out VA over the years, they chose not to do so. Leaving it to others.

At least once a year there's a "SQ wants to buy a larger VA stake" article which has turned out to be "fake news" every time in the past 5 years. In some years, it's also 'convienantly' timed when the occasional news articles on other rumoured suitors such as TK, NH or DL pops up.

It's probably time to automatically treat any "SQ" interest as "fake news" until there's a formal ASX announcement or there's pen to paper.
Chances are there will be the yearly "SQ wants to buy a larger VA stake" fake news article occuring later this year.

This has been discussed before, but comparing the SQ frequency to QF's between an Australian destination and Singapore is not understanding the differences in businesses.

Singapore is single city / state and is geographically located in an area where it can fly passengers from cities to its hub in Singapore and then distribute them through its network. It does this well.

Australia is a vast country, with population spread out over a number of cities. QF flies multiple times daily and takes passengers from those cities to its main hub at Sydney. It will never offer 5 daily flights from Perth to Singapore, because it will not have the distribution network at Singapore of the home airline.

@levinn - in the next 10years, something magically will occur that will see the demand for London flights drop? Yeah righto! Look forward to everyone speaking French their too!

The biggest population centres are already in the Asia Pacific rim and so are the biggest economies. But you understand yield management - flying a plane to big population centre does not guarantee you a profit (Beijing?). You don't think Qantas knows where it's corporate customers need to go? Considered how Perth to London is going?

Qantas currently flies to Santiago.

Chicago may or make not work, but you think Qantas doesn't have data about how many passengers they are popping onto AA plans for Chicago at SFO, LAX and DFW? You don't think they have those figures? They just point at a map and say fly here?

Thank you for letting is know where SQ will be flying their planes this decade. I look forward to their announcement.

As for the actual topic, I'd hope they go with the A350 as I find that airlines are able to fit it out in a more passenger friendly way than a 787. It will be interesting to see what they do with the premium economy seats when flying across the continent.

"in the next 10years, something magically will occur that will see the demand for London flights drop? Yeah righto!"

Um, actually yes. You aren't aware of a little thing called coronavirus?

Corona-virus, Heineken-virus, Becks-virus, Guinness-virus, IPA-virus. They come and they go. Brexit is a lock, its baked in, and if Boris Johnson gets his way, Britain will be open to the world for business in a way the EU will scoff at rather than admit was right. That's why, IMHO, if Virgin Atlantic and VA get their 'act' together and match direct flights with QF10/9, the in-cabin service will see VA/VS become very profitable indeed. Same with VA in LAX with Delta ('DL'). At the moment, connecting flights onto DL from VA arrivals/departures is a joke, especially those return DL flights from the East coast into LAX.

Thanks for the popcorn post.

Tigerair Australia is wholly owned by Virgin Australia. It no longer has links with the now defunct Tiger Airways Singapore (rolled into Scoot) nor Tigerair Taiwan (partly owned by China Airlines)

Oh but also the joys of being gold and welcomed to the contract lounge in AUH. Or having to argue your way into a Hainan lounge (on everyone of your flights) because you're a nobody to them. Or the mish mash of partners and the varying levels of benefits (Air Canada anyone?). Or not having any partners inside Europe. Or standing at The Home lounge in Sydney and watch the Etihad and Virgin lounge attendant argue who's guest it is.

Airlines also need to make money. It's nice being so generous to your most frequent fliers. But if no one else flies you or is willing to spend money on you then it's good while it lasted.

If Australia only had one airline, we probably wouldn't even have lounges so you wouldn't need to worry. Competition has given the consumers the current experience which is better then most of the rest of the world.

Some of those pig headed Q flyers who think they are getting a good experience should take there blinkers off and look at the better offer. Can I say it's like a Beetroot

I've evenly split my flying between both and have been both in the past few years Platinum and Gold with both airlines. I enjoy flying both airlines, however I would like to see a healthy and profitable airline first and foremost because that is what contributes to a healthy competition. A profitable airline is able to invest in its products and do things which up the ante against its competitors. An airline which doesn't live up to the image it likes to project (Virgin with the 'free food' anyone?) isn't one that encourages people to fly them often or choose them.

What is "profitable", people / companies have the option of pulling out of businesses / shares that don't aline with their wants and needs. If VA didn't aline with my wants / needs I would pull out today not tomorrow and move on, do you really think the shareholders don't think the same way. Profit isn't a dirty word but what is the profit they see in VA.

Profitable means making money. They have lost well over a billion dollars since they rebranded as VA. They keep getting capital injections. Of their shareholders: NZ has walked away, HNA is about to fall over, SQ is annoyed, EY can't afford anything else, and who knows what state Nanshan is in. In such economic times, their shareholders don't have pockets to top up a money pit. Something has to change or something will eventually give.

Profitable doesn't mean making money, I come from businesses that don't require banks to fund them, we fund ourselves. But we have products (like VA) that don't make money. You can't blame VA for a shareholders problem.

There really are no words...

Considering there's been newspaper articles of internal rumours of all 4 major shareholders looking at selling out of VA at differing dates, it suggests that they are only holding onto VA as an ongoing concern until they find a buyer.

Being a shareholder of a company doesn't always mean that they're happy with the company.

Considering that HNA has been trying to off-load their VA stake for ages and that there is no serious buyer suggests that VA isn't exactly a company worth "investing in" as of the moment.

As a VA flyer, I enjoyed brisk entry into DLs lounge in T3 on arrival into LAX and same into Emirates lounge in TB on return flight. Ditto VS Clubhouse in Heathrow. Though I can't remember which pair of lucky socks I was wearing.