Virgin Australia slashes 737 MAX order

Virgin Australia will go ahead with its order for Boeing 737 Max aircraft but in a much reduced number.

A rendering of Virgin Australia’s new Boeing 737 MAX 10.

Virgin Australia has slashed its order of Boeing 737 MAX aircraft from 48 to 25 and delayed the first delivery by two years, in a move that will save the airline billions of dollars.

It is the second time the controversial order has been renegotiated with the US manufacturer.

Last year the airline’s then CEO Paul Scurrah postponed the order until 2021 in response to Virgin Australia’s precarious fin­ancial position and the global grounding of the 737 MAX after two fatal crashes.

Then the COVID crisis struck, and Virgin Australia went into voluntary administration, resulting in the carrier’s sale to US private equity firm Bain Capital.

It was thought the 737 MAX order might be scrapped altogether as the airline restructured its fleet and finances, with a new aircraft costing in the vicinity of $180m.

But new CEO Jayne Hrdlicka said the airline was taking a long-term view of Virgin’s future requirements, and would no longer order the 737 MAX 8, only 737 MAX 10s.

“We have already moved to simplify our main line fleet and committed to the Boeing 737 aircraft as the backbone of our ­future domestic and short-haul international operations,” Ms Hrdlicka said.

“The restructured agreement and changes to the delivery schedule of the Boeing 737 MAX 10 gives us the flexibility to continually review our future fleet requirements, particularly as we wait for international travel demand to return.”

With a range of just over 6000km and seating for 230 passengers, the MAX 10 will not be suitable for long-haul flights from Australia to the US or Japan.

But Ms Hrdlicka said the aircraft would allow Virgin Australia to “build on the operational flexibility” of the existing fleet and ensure the airline remained competitive on the other side of COVID-19.

The MAX 10 was not built when other 737 MAX aircraft were grounded in response to the Lion Air and Ethiopian Airline crashes that claimed 346 lives. But it is still subject to the global grounding that is only now in the process of being lifted.

Ms Hrdlicka said the airline was confident that plans for the aircraft to return to service would support its arrival in mid-2023.

Designed to deliver maximum efficiency for operators, the aircraft features advanced technology winglets, larger flight deck displays and about 50 more seats than 737-800s.

“These enhancements will give us the ability to manage demand and deploy the B737 MAX 10 on high-density domestic and short-haul international routes or where there are constraints due to slot availability limitations,” Ms Hrdlicka said.

A Boeing spokesman said they were pleased to reach an agreement that would allow Virgin Australia to adjust its 737 MAX fleet to better meet its business model post-administration.