Virgin Blue, Australia’s second largest airline, is to embark on a massive spending spree with the purchase of 105 Boeing 737 aircraft. The deal represents the largest order for Boeing in the past 18 months, as well as the Virgin Blue’s most significant fleet upgrade in its 10-year history.
The price was not disclosed, but Virgin Blue CEO Brett Godfrey said the deal was completed on “attractive commercial terms” and that financing was expected to be completed soon. The agreement includes 50 firm orders, 25 options and future purchase rights for a further 30 aircraft. Delivery is scheduled from 2011 to 2017.
“Securing this agreement now places Virgin Blue in a strong position to prepare for steady future growth as domestic and short haul markets recover,” Godfrey said in a statement.
In February, Boeing said it expected to regain its title as the world’s biggest civil aircraft maker from Airbus within four years, having lost the top spot to the European manufacturer for the first time in 2003.
Virgin Blue is attempting to eat into Qantas’s share of the Australian market, as well as fight off competition from new market entrants, including Tiger Airways. It said the new aircraft were needed “to aggressively ensure market share is not eroded and to provide additional growth options”.
Virgin Blue came in ahead of Qantas this year when it reported half-year net profits of A$62.5m against A$58m.
The airline, which counts Richard Branson’s Virgin Atlantic as its main minority shareholder, is also expanding services on routes between Australia and North America and has an alliance with Delta.