Virgin Australia CEO signals expansion of international network
Virgin Australia (VA, Brisbane Int’l) CEO Jayne Hrdlicka has indicated that an expansion of the airline’s small international footprint could be considered ahead of a potential IPO in 2023.
“We envision a world of possibilities and expand our reach,” Hrdlicka said at the Flight Center Illuminate conference in Sydney on Oct. 20. “We are very focused on our B737 aircraft footprint. We have B737-700s and -800s, and we have MAX-8s and 10s coming into the fleet, which gives us a bit more range, and so we will add to the network.
Virgin Australia’s current international network includes Denpasar, Nadi, Port Vila and Apia Faleolo, with flights from Queenstown restarting in November. Before the pandemic, the airline served more distant destinations, including Los Angeles Int’l and Hong Kong Int’l, using B777-300(ER) and A330-200. However, after the airline’s collapse in 2020 and its subsequent sale to private equity firm Bain Capital, leaner Virgin Australia now operates only B737s and has scaled back international flights.
Hrdlicka did not specify which new or returning international destinations were being considered, but the lack of wide-body aircraft limits the airline’s ability to operate long-haul flights. However, the existing fleet of B737-800s will be reinforced by the arrival of four B737-8s in early 2023, followed by the first of twenty-five B737-10s in mid-2023.
Before the pandemic, Virgin Australia had secured slots at Tokyo Haneda and planned to start flights from Brisbane at the start of the 2020 IATA summer flying season. Covid-19 blocked these flights before they started , but so far Virgin Australia has retained its Haneda slots, enjoying a waiver on the usual use it or lose it requirements. However, as the airline industry recovers, these waivers will soon expire and there is speculation that in order to retain these hard-fought slots, Virgin Australia will indeed start flying to Haneda.
In the meantime, Hrdlicka is excited about the current strong passenger demand and rising yields, saying the recovery is not “a short-term sugar hit”.
“Total market demand right now is where it should be if the music hadn’t stopped. If you look at GDP growth from 2019 to today, the capacity is not there yet, but the underlying demand is where you would expect it to be. be,” she said.
Virgin Australia’s takeover and expected 2H 2022 earnings have heightened speculation of a 2023 IPO. This would allow Bain Capital to sell its stake at a time when earnings are strong and their return on investment can be maximized . Hrdlicka, who isn’t ruling out an IPO, wouldn’t be stuck on a schedule for one.