Virgin Australia has officially pushed back its aircraft delivery timeframes due to production hurdles at global manufacturing giant Boeing, joining US giants United, Alaska and Southwest, which have all confirmed their orders will not arrive on time.
The airline told staff on Friday that 31 of the Max aircraft it has on order would not arrive on time, despite insisting in January that it would not be affected by the increased production timeframes imposed on Boeing after a door plug on an Alaska Airlines 737 Max-9 fell off mid-flight.
Virgin’s first Boeing 737-8 MAX aircraft, Monkey Mia, arrived last June.
The carrier business ordered 14 737 Max-8s in total, with the bulk of this order originally due to arrive by the end of this year and four already in service. The group now expects just four Max-8s to be delivered this year in light of the production delays, with the remaining six not expected until 2025. Virgin had originally expected one Max-8 to arrive every month for the rest of this year.
Virgin’s order of 25 Boeing 737 Max-10s were due to begin arriving next calendar year. The airline has pushed back its delivery timeframe to FY26.
The delivery blowout is the latest in a string of setbacks for Virgin, which has been grappling with poor on-time performance and above-average flight cancellation rates all year due to internal supply chain challenges– including a lack of spare aircraft and crew– as well as external factors including air traffic control staffing issues and weather.
A spokesperson for the airline business did not comment on the outlook for the Max-10 order but confirmed the 737-8 delay on Friday. Virgin had previously maintained there would be no changes to the timeframes for either order.
“We have been advised by Boeing there will be a delay to the delivery of some 737 Max-8 aircraft, and we are working to minimise impacts to our schedule,” a spokesperson said.
A Boeing spokesperson said the manufacturer was in contact with all airlines about delivery delays.
“We are squarely focused on implementing changes to strengthen quality across our production system and taking the necessary time to deliver high-quality airplanes that meet all regulatory requirements. We continue to stay in close contact with our valued customers about these issues and our actions to address them,” a spokesperson said.
Boeing is one of the biggest aircraft manufacturer in the world, with more than $130 billion in assets. It was prevented from expanding production of its newest narrow body line (known as the Max line) by the US aviation regulator, the Federal Aviation Administration, in January after the Alaska Airlines door plug incident.
Since then, global airline giants with strongholds far larger than Australia’s second biggest airline have adjusted their delivery timeframes for their looming Max orders including United and Southwest, with United casting doubt on the Boeing being able to meet any Max-10 delivery for the forseeable future.
“Boeing is not going to be able to meet its contractual deliveries on at least many of those airplanes, and let’s leave it at that,” United Airlines boss Scott Kirby told investors in January. United had been expecting 500 Max-10s.
Alaska Airlines also confirmed its order of 23 Max aircraft due to arrive this year had been delayed and Southwest said it would adjust its delivery timeframe to accommodate for the expected delays.
Virgin is controlled by private equity giant Bain Capital, which saved the airline from administration for $3.5 billion in November 2020. Bain had originally planned to float the airline business back onto the Australian Securities Exchange by the end of this year.
Former Virgin Australia chief executive Jayne Hrdlicka will not be able to see the airline through the IPO stage.Credit: Dan Peled
But earlier this month Virgin’s chief executive, Jayne Hrdlicka, abruptly announced her resignation and said she would not be able to see the airline through the IPO stage, which could take another three to five years.
Investors familiar with the plans who were not authorised to speak publicly said Bain had originally planned to sell Virgin as a leaner, meaner operation than its former iteration and a key part of this sell rests on its single-fleet type. Solely flying Boeing aircraft also means Virgin is more exposed than its bigger competitor, Qantas, in the event that the manufacturer’s current issues are not ironed out soon.
Bain cancelled its non-deal roadshow investor meetings in April last year and has not rescheduled them since. The business’ former chief development officer, David Marr, who was charged with leading the group’s plans to float, quit in October. The group’s head of investor relations, Chris Vagg, has also resigned. These retirements mean the three executives originally scheduled to pitch the potential float to investors have since left the business.
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