VIRGIN AUSTRALIA: More delays to Boeing 737 MAX aircraft arrivals

Troubles at the manufacturer Boeing are impacting 31 deliveries of the 737 MAX aircraft family ordered by Virgin Australia, according to a management statement to staff on Friday, 15 March.

Back on 26 January, a Virgin Australia spokesperson assured the AFR that no delays were expected on delivery of the 36 Boeing aircraft it has on order.

“The existing order of MAX-10s, with an expected delivery from late 2025, remains in place. Virgin Australia also expects delivery of 11 MAX-8 aircraft throughout this year, equating to delivery of one new aircraft almost every month.”

Virgin Australia spokesperson quoted in the AFR

The delays are blamed on production conditions imposed on Boeing by authorities. Slower schedules for manufacturing were imposed by the FAA following the Alaska Airlines 737 MAX 9 incident. During a scheduled service a door plug fell from the aircraft mid-flight

Virgin Australia’s Boeing order

The airline has 14 of the 737 MAX-8s on order. Four are in service, and the remaining ten were meant to arrive before the end of 2024. Manufacturing delays mean only four aeroplanes will be delivered this year, and the remaining six will not arrive until 2025.

Virgin Australia also has 25 of the 737 MAX 10 variants on order. These aircraft were scheduled to commence arrival in 2025. That has now been pushed back to the 2026 financial year.

Impact of delay on Boeing 737 deliveries

Delays and cancellations have bedevilled Virgin Australia’s performance lately. The addition of new aircraft would have helped alleviate this issue. Supply chain issues and a lack of available spare aircraft have contributed to poor on-time performance. This includes a greater-than-average flight cancellation rates across the last 12 months. That is on top of the air traffic control staffing issues and weather that impact all airlines.

2PAXfly Takeout

Virgin Australia is a minor airline in the face of Boeing’s delays to aircraft manufacturing. USA Airlines, like Alaska Airlines, Southwest, and United, have hundreds of planes on order, all subject to the same delays.

This news probably puts another nail in the coffin of Virgin Australia and its owners, Bain Capital, ‘s proposed stock market listing for this year.

Having enjoyed the financial froth of the return to flying following COVID-19, when demand was ecstatic and prices were high, Virgin is now facing some headwinds. The delay in aircraft delivery will stop its growth, and mean that delays and cancellations are likely to bedevil its on-time performance into 2025.

Looks like investors who last year advised that the float on the ASX should be delayed because the airline had yet to prove its profitability in more normal competitive circumstances.