Whoever will end up taking ownership of Virgin Australia will need to navigate the company through a much-changed post-COVID aviation reality. Administrators sent out a business management plan called “Virgin v2.0” to prospective buyers on Monday. In it, they propose that the airline’s widebody fleet be replaced by Boeing 787 Dreamliners.
Eight Dreamliners to replace current widebodies
Virgin Australia’s potential buyers will all have to have submitted preliminary bids by Friday 18:00 this week. As reported by the Sydney Morning Herald, administrators have presented them with a confidential business management plan for the re-launch of the carrier, called “Virgin v2.0.”
It contains the suggestion that the airline should replace its current long-haul fleet, consisting of five Boeing 777s and six Airbus A330, with the purchase of eight Boeing 787 Dreamliners. However, according to the Australian media outlet, bidders are far from excited about the proposition.
They are concerned that the administrator’s plans do not take into consideration how fundamentally different the industry will look post-crisis. And at list prices of between $250 million and $338 million, one can see why it would be an investment any owner might be reluctant to make right now.
Single-type solution sought by Scurrah
The idea of a single-type long-range jet set-up has previously been propagated by Virgin Australia CEO Paul Scurrah at the airline’s presentation of its financial results for June-December 2019. Scurrah then called the small widebody fleet “inefficient.”
He also argued that particularly the A330 was not economical when looking at ownership costs combined with fuel performance. If the deal was worth doing, he said in regards to replacing the fleet, it would have happened within the year.
According to Executive Traveller, Virgin Australia’s Boeing 777s were mostly used to operate Australia-US routes, flying from Sydney, Melbourne, and Brisbane to Los Angeles.
The A330s have, in better times, served the airline’s east-west domestic network, with the occasional foray into Asia, such as the now-defunct Sydney and Melbourne to Hong Kong.
International routes in the plan
The “Virgin v2.0” management plan also suggests that Virgin Australia would continue to operate international routes to Los Angeles, and the Brisbane to Tokyo route previously meant to launch on the 29th of March. Administrators would also see added services to New Zealand, Bali, and Fiji for the resurrected airline. This could be at odds with buyers who want to see the airline return to focusing on low-cost domestic traffic.
How bidders feel about the plan presented to them in its entirety will become clear in due course of time. We have been following the fate of Virgin Australia carefully here at Simple Flying, and are eager to see which potential suitors will have ended up placing bids by the deadline on Friday.
Possible candidates, numbering close to 20, include Indian low-cost carrier IndiGo, Australian mining magnate Andrew Forrest, and the State of Queensland. The administrators hope they will have secured a new owner by mid-August.
Simple Flying has sought Virgin Australia for a comment but was yet to receive a reply by the time of publication.
Do you think it would be a smart move for Virgin Australia’s new owner to replace the wideboy fleet right away? Why or why not? Let us know your thoughts in the comments.