Tigerair moving to 737s - VA to swallow $450 million pill

[medhead]

Just noticed this in Thursday Australia. Seems that VA are going to rationalise the fleet to save costs. Tiger's A320 are out, VA 737s to move over to Tiger as new 737 Max arrive.

Virgin Australia will take a one-off $450 million hit to its full-year earnings and sell Tigerair’s entire fleet of Airbus A320 planes as part of its ambitious, three-year cost-cutting program to repair its balance sheet.

Virgin revealed the financial whack and plans to rationalise its aircraft fleet yesterday as it laid bare the terms of its $852m capital raising that would be primarily used to chip away at its mountain of debt.

Link to article: Nocookies | The Australian
Full text available by googling "virgin to swallow a $450m pill"

This might work as well: Let me google that for you

 

[pauly7]

Interesting... Really going after costs with a scalpel.
Fleet rationalisation makes perfect sense, especially given the performance of Virgin Regional, the downturn in mining and the need to get Virgin mainline moving again.
I just wonder at what opportunity cost, on the other hand they have to compete against QF who being increasingly creative and efficient with fleet utilisation - they have a lot of flexibility to throw a lot of different airframes at different routes to match capacity and demand, and are quite happy now to mix it up quite a bit (737/717/Q400s often flex on routes depending on demand).
Tiger - I guess we will start seeing that appearing where VA doesn't have enough margin and bums on seats to make it worth mainline operating. Having the same planes in both fleets will save costs and complexity.
Interesting read thanks for posting medhead.

 

[eastwest101]

Yes, was predicted and alluded to in another thread that removing two types from the combined VA/TT fleet ( the E190s and A320s) must be a sizeable cost saving. I would imagine that the operating economics of the B738 vs A320 as far as fuel, labour costs, maintenance costs etc would be fairly close to each other, the only thing you lose by ditching the A320 is the containerised underfloor handling (maybe slightly less labour intensive?) vs the slightly better range that the B738 has maybe tipped the scales slightly in favour of the B738? Or possibly the age, second-hand market and leasing costs plus the more numerous B738 fleet vs the slightly smaller A320 fleet was a deciding factor?

 

[Quickstatus]

And the A320 pilots will have to transition to B737

What is the usual pathway for pilots to transition from one type to another and how would an airline manage the training?.

Joystick to steering column among other differences.

Maybe JB747 can provide some insights into his training when he moved from B747 to A380

 

[eastwest101]

Yep - good point - all the E190 and A320 pilots would be up for retraining costs or conversion to B738 type. But then they save money by not having the E190 & A320 training contracts, maintenance contracts, simulator costs plus check pilots etc. Also get to sell/throw out all the documentation, certification paperwork and admin costs, plus aircraft spare parts holdings and E190/A320 specific ground equipment... the list goes on when you think about it.

 

[Quickstatus]

Yep - good point - all the E190 and A320 pilots would be up for retraining costs or conversion to B738 type. But then they save money by not having the E190 & A320 training contracts, maintenance contracts, simulator costs plus check pilots etc. Also get to sell/throw out all the documentation, certification paperwork and admin costs, plus aircraft spare parts holdings and E190/A320 specific ground equipment... the list goes on when you think about it.

Quite correct.

How easy will it be for FBW pilots to transition to a non FBW type compared with the other was round.

 

[pauly7]

Yep - good point - all the E190 and A320 pilots would be up for retraining costs or conversion to B738 type. But then they save money by not having the E190 & A320 training contracts, maintenance contracts, simulator costs plus check pilots etc. Also get to sell/throw out all the documentation, certification paperwork and admin costs, plus aircraft spare parts holdings and E190/A320 specific ground equipment... the list goes on when you think about it.

What makes you so certain they will all be retrained... VA/TT are restructuring and downsizing. In line with all the cuts at corporate I would guess some pilots will be going too...

 

[Quickstatus]

Its interesting that the Borghetti fans are now super quiet. Once he was feted and even seen as the CEO Qantas should have had. Now it appears he has one more chance to make it work. His counterpart at QF is sitting pretty with a huge turnaround while VA is still trying to find a consistent narrative let alone a better financial story in an environment of lower fuel and interest costs and a lower cost base than QF.