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Virgin Australia to defer deliveries of Boeing 737 MAX jets

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Via Reuters Finance

A Boeing 737-800 aircraft from Australia’s second largest airline, Virgin Australia, is seen on the tarmac at the domestic terminal of Sydney Airport in Australia, August 19, 2018. Picture taken August 19, 2018. REUTERS/David Gray

SINGAPORE (Reuters) – Virgin Australia Holdings said on Tuesday it had agreed with Boeing Co to delay the first deliveries of 737 MAX jets for nearly two years to give it time to be satisfied with safety and to reduce capital spending.

The move comes as other 737 MAX customers, including Norwegian Air Shuttle ASA and Indonesia’s Lion Air, have also delayed deliveries in the wake of a global grounding of the plane following fatal crashes in Indonesia and Ethiopia.

Virgin had planned to take its first Boeing 737 MAX 8 in November, making Australia’s no. 2 airline the first operator of the model in the country.

Virgin Chief Executive Paul Scurrah, who started the role on March 25, said the airline would not introduce any new aircraft to its fleet until it was completely satisfied with its safety.

“We are confident in Boeing’s commitment to returning the 737 MAX to service safely and as a long-term partner of Boeing, we will be working with them through this process,” he said in a statement.

Boeing CEO and Chairman Dennis Muilenburg on Monday promised to win back the public’s trust after facing tough questions in the wake of the two fatal crashes.

Virgin said on Tuesday it would convert another 15 of its 48 737 MAX jets on order to the larger 737 MAX 10 version. The first of 25 737 MAX 10s will be delivered from July 2021 and the first of 23 737 MAX 8s from February 2025.

Scurrah said the revised timing would allow for a significant deferral of capital spending by extending the use of existing aircraft.

Reporting by Jamie Freed in Singapore and Rushil Dutta in Bengaluru; Editing by James Dalgleish and Sonali Paul


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