Virgin Finally Scraps Long-Deferred Airbus Superjumbo Order

(Bloomberg) -- Virgin Atlantic Airways Ltd. canceled its order for six Airbus SE A380 superjumbos, finally acknowledging that the world’s largest passenger aircraft has no place in its fleet after years of deferring a decision on the double-decker.

The deletion appeared in Airbus’s February order-and-delivery tally published Wednesday, and was confirmed by the airline. Virgin originally ordered the planes more than a decade ago, but proceeded to give only tepid support to the A380 as it went on to build a fleet around smaller wide-body jets.

Chief Executive Officer Craig Kreeger said that Crawley, England-based Virgin is happy with its relationship with Airbus, from which it recently agreed to buy the latest A350 twin-jet model, but that the four-engined, 550-seat A380 was “never really likely to make sense” for the company.

“It was not a particularly difficult call to make,” Kreeger said in an interview in London as Virgin revealed a new economy-class product. “It was nice having it as an option in case the world changed in a way that it made sense, but I had not seen a real opportunity for us to acquire those airplanes.”

Production Cut

The cancellation came on the same day that Toulouse, France-based Airbus confirmed a reduction in A380 output to just six units a year from 2020 to reflect a sluggish order intake. Dubai carrier Emirates is the only major customer for the plane, with most other operators taking only a dozen or so in preference to making the giant aircraft the centerpiece of their fleets.

Virgin could have found a role for a small number of A380s in a handful of markets, but doesn’t have enough high-volume routes to support a reasonably-sized fleet, Kreeger said, adding that 10 planes might be closer to the number required to generate real efficiencies.

The U.K. carrier’s order book is effectively complete, the CEO said, with 12 A350s set for delivery from early next year through 2021, by which point it will have 44 aircraft. Kreeger said previously that rolling over the superjumbo commitment each year was useful in encouraging regular talks with Airbus that helped seal terms for the purchase of the A350s and smaller A330s.

Virgin’s decision to finally drop the A380 highlights doubts over other orders in the superjumbo backlog, with several other customers having selected planes years ago but not followed through on actually taking them. Among those is Amadeo, an aircraft-leasing business that ordered 20 superjumbos but hasn’t taken any after failing to establish a rental market for the model.

While Virgin has always positioned itself at the forefront of the upscale travel market that the A380’s premium cabins have sought to court -- think in-flight bars and enclosed suites -- the change of heart may partly reflect the carrier’s relatively new ownership structure.

Founded by Richard Branson, Virgin is 49 percent owned by Atlanta-based Delta Air Lines Inc., while Air France-KLM Group, a Delta ally, has agreed to buy a 31 percent stake in a move that will see the billionaire’s holding reduced to 20 percent. So far, no U.S. carrier has bought the A380.

To contact the reporters on this story: Benedikt Kammel in Berlin at bkammel@bloomberg.net, Christopher Jasper in London at cjasper@bloomberg.net.

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, Tara Patel, Susan Warren

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