Why Virgin Atlantic Cancelled Its Airbus A380 Order

In early 2018, Virgin Atlantic decided to drop its order for six Airbus A380s. At the time, Virgin Atlantic’s then CEO, Craig Kreeger, said it wasn’t a tough call. But the low key cancelation was a far cry from the hoopla surrounding the order when first placed. At the time, the A380 was everything Virgin Atlantic wanted to be – big, lavish, attention-getting, and globe striding. But then things changed.

It was another era. Richard Branson holding onto his A380 ambitions. Photo: Getty Images

“I am incredibly excited about the opportunities these aircraft will bring,” said Richard Branson back when confirming the A380 order in 2001.

“Our reputation has been built on innovation, and the A380 will give us the opportunity to create a new flying experience for our passengers.”

At the time, Virgin Atlantic was upsizing. The airline wanted to keep growing, expand existing services, and launching new routes. There was talk of onboard duty-free shops and casinos with Virgin Atlantic to roll out unmatched inflight facilities.

The big jets were then due to start landing at Virgin Atlantic from 2006 onwards, but the airline kept postponing.

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Things changed at Virgin Atlantic, & Delta bought in

Over time, things changed at Virgin Atlantic. Richard Branson’s personal slice of the ownership pie shrank, and hardnosed operators Delta Air Lines bought in. Delta, like other US carriers, don’t do the A380.

Earlier last decade, speculation was mounting about the future of the A380 at Virgin Atlantic. When Delta bought into Virgin Atlantic in 2013, some analysts argued the big Airbus plane didn’t fit into Delta’s preferred operating model.

“Given Delta’s relentless focus on improving the gap between its return on invested capital and the weighted average cost of capital, it does not seem likely that the US major would be willing to back an aircraft type that has yet to prove itself financially for those who operate it,” Forbes quoted Deutsche Bank analyst Mike Linenberg saying.

At the time, Virgin Atlantic maintained it would take the first A380 in 2018 but also said it continually reviewed its fleet needs. To be fair to Virgin Atlantic, that’s a fairly stock standard airline position.

Now part owned of Virgin Atlantic, Delta Air Lines was never a fan of the A380. Photo: Delta Air Lines

Virgin Atlantic hitched its star to the A350

In 2016, Virgin Atlantic bet big on the A350, buying eight to start arriving in 2019 and leasing four more, to take effect from 2020. Craig Kreeger praised the fuel efficiency and economics of the A350, something the A380 isn’t noted for. Many saw the A350 order as the nail in the coffin for the Virgin Atlantic A380s.

In 2018, Craig Kreeger acknowledged the inevitable in a widely reported speech in London.

“It’s hard but not impossible to see a world where we want to take the aircraft,Bloomberg reported him saying. “It’s not a clear choice.” 

Mr Kreeger cut to the chase. The world had changed in the 20 years Virgin Atlantic had its on-again off-again dalliance with the A380. Those barnstorming days of the early noughties were long gone.

“We just can’t find enough markets that made sense for an aircraft that big, and it didn’t make sense to take just one or two because of fleet complexity.” 

Virgin Atlantic went on to order and fly smaller A350s. Photo: Airbus

In March 2018, Virgin Atlantic finally brought the ax down on the A380 saga. The airline didn’t say anything publicly until people noticed the order had dropped off the Airbus delivery list. When asked, Virgin Atlantic said;

“Following a thorough review of our fleet, we have taken the decision not to pursue our order for six Airbus A380.”

Two and a half years down the track, with the benefit of hindsight and Virgin Atlantic in a world of financial pain, passing up on those A380s was one of the smartest decisions the airline ever made.