Virgin Atlantic CEO Sees 747 Replacement Choice in 5-9 Months--Update

By Robert Wall

LONDON--Virgin Atlantic Airways Ltd. Chief Executive Craig Kreeger said the carrier will decide in five to nine months how to replace Boeing Co. 747 jets used on leisure routes amid one of the biggest revamps of the British carrier's fleet and network.

The likely replacement candidates are Boeing 787 long-range, jets or the plane maker's even larger 777 as well as Airbus Group NV's A350 wide-bodies, he said Wednesday.

Virgin Atlantic, founded by billionaire Sir Richard Branson, flies seven 747s on leisure routes from London Gatwick. Those planes come to the end of their lease period starting in 2019.

The size of the fleet order, which would include options for growth, hasn't been fixed, Mr. Kreeger said. The airline has placed orders for A380 super-jumbos but is unlikely to take those, he reiterated while speaking at the World Travel Market conference.

Virgin Atlantic this year started flying Boeing's 787-9 Dreamliner to phase out less fuel efficient Airbus A340 jets and 747 jumbos flown out of London Heathrow. The carrier will introduce 21 Dreamliners in the next four years.

Boeing has struggled with reliability of a smaller version of the Dreamliner that came first. Mr. Kreeger said the 787-9 reliability has been good and on par with that seen on planes in service already a few years. The aircraft will help deliver 30% fuel savings over the planes it replaces, he said. Fuel is one of the major costs of an airline.

Mr. Kreeger has vowed to return Virgin Atlantic to profit this year after successive losses. Bookings over the summer were on plan, he said.

The focus on profitability comes after Delta Air Lines Inc. took a 49% stake in Crawley, England-based Virgin Atlantic and with the two airlines establishing a close partnership that has boosted sales. The airlines this year also adjusted their service to improve connections on both sides of the Atlantic, with Virgin Atlantic exiting some markets to focus on transatlantic flying.

Mr. Kreeger said the two airlines mightier consider a joint frequent flyer program, though he added no plans exist to do so and that each carrier's loyalty scheme is quite different. "Would we ever consider it? Sure. I think we have to put everything on the table," he said.

The focus on optimizing operations with Delta Air Lines also puts other issues on the back burner. Mr. Kreeger said the airline may "eventually" join the Skyteam alliance, in which Delta is member. A decision on alliance membership is still years away, though, he said.

Delta's stake in Virgin Atlantic is currently being under examination by the European Union as part of a wider probe of foreign minority ownership in EU carriers. Foreign airlines are required to maintain only minority stakes in EU airlines. The European Commission, the bloc's executive arm, is concerned some minority stake holdings give the foreign owner too much sway over the airline's operations.

Mr. Kreeger said he is not worried about the review and has spent little time focusing on it.

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