No Extra 77Ws for VA
 

Today's AFR reports that VA has decided not to exercise its option for a 6th 77W and will not launch BNE-AUH with its own metal as previously planned.

John Borghetti has instead decided to preserve his capital for extra A330s that can be used domestically and regionally as it steps up its battle with QF.

Will they get there deposit refunded from Boeing?

Seems like the money is not in international flights, sounds like a comment from another unnamed local airline

Jarden

When you reserve an option with a manufacturer, there is usually a non-refundable deposit paid to hold that place in the production line which must e converted or cancelled X number of months from delivery.

The per unit cost of firm orders are often negotiable down if you take a lot of options, and a manufacturer will sometimes allow an airline to take some options with out a deposit if it is trying to break into a new market or if the airline has booked lots of firm orders.

Options can also be traded between airlines if another airline needs an aircraft a little sooner than the current backlog will allow, but usually only if long lead items specific to the first airline's particular configuration haven't yet been bought by Boeing.

Cheers

Not quite... the ASX release on 25 October stated that they had a "Successful turnaround of international business into profit - profitable YTD" with "Strong international load factors across V Australia network" with the bottom line - "Improving international margin with minimal capex". That's a contrast from what another carrier is saying about the international business.

An extra 777 might help consolidate V Australia's position but at a significant capital expense at a time when they possibly think they are on to something in the domestic arena. If the AFR is right (and they aren't always - they like reporting rumours, sometimes they're right and other times whatever) then of course it's entirely plausible that they've decided the domestic A330 venture has been a success and that might be a better use for that capex while the competition is having a tender moment. Doesn't mean they haven't got international on the right path now.

And don't forget the comment states the A330 could be used domestically and regionally. Whose to say VA aren't considering expanding into Asia to complement their SQ alliance?

Thanks for the info guys.

With a relatively strong sales of the new Boeing 777-300ER, why can't VA to take the last B77W and to lease the plane to someone else?

I've had a read of the full article. Nothing new or surprising.

Officially V hasn't made a decision. 777s, if the route was to be launched in Feb 2012, have long been ruled out. They were looking to deploy an A330 BNE-SIN-AUH, mirroring Etihad's BNE schedule.

With the capacity commitment with Delta as part of receiving US DOT approval for ATI, they were unable to reduce US sectors year-round to free up a 777 for AUH.

Looking at V's AUH loads, it's not surprising BNE-AUH (however you get there) is not a priority.

Capex is not a fair comparison. A 777 would be purchased outright ($$$) whereas the A330s are so far leased ($), in short supply, and the domestic market in Australia--and some Asian markets--is where the bucks are.

The outstanding questions are what double digit number of A330s Virgin wants and when this decade they will achieve that figure.