Virgin Australia renegotiates deal with Boeing for new 737 MAX aircraft

Virgin Australia has revealed it has renegotiated a multi-billion-dollar deal with plane manufacturer Boeing for its order of the grounded 737 MAX aircraft.

In a statement on Wednesday, the embattled airline said it had halved its original purchase, slashing its plane order from 48 to 25.

Virgin initially signed the contract for 25 B737 MAX 10 and B737 MAX 8 aircraft prior to the coronavirus pandemic, but due to its financial turmoil sparked by the health crisis, the major airline decided to scale back and only purchase the larger planes.

Virgin Australia chief executive Jayne Hrdlicka said the restructured agreement would enable the airline to be more flexible as the industry emerges from the 2020 mass grounding caused by COVID-19 travel restrictions.

“We have already moved to simplify our main line fleet and committed to the Boeing 737 aircraft as the backbone of our future domestic and short-haul international operations,” Ms Hrdlicka said.

“The restructured agreement and changes to the delivery schedule of the Boeing 737 MAX 10 gives us the flexibility to continually review our future fleet requirements, particularly as we wait for international travel demand to return.”

The B737 MAX 10 will be used on major domestic routes and short-haul international flights.

Boeing’s 737 MAX fleet has only recently been recertified to fly by the US Federal Aviation Administration after a technical malfunction caused two planes to crash in the past two years.

All models were grounded globally in 2019 after a MAX 8 plane flown by Ethiopian Airlines crashed and killed 157 people. Indonesian airline LionAir also had one of its MAX 8 planes crash into the sea in October 2018, killing 189 passengers.

The Civil Aviation Safety Authority is yet to approve the planes for operation in Australia.

Virgin’s order of MAX 10s is expected to arrive in mid-2023.

“The MAX 10 will allow us to build on the operational flexibility we have been able to achieve with our existing fleet throughout administration to ensure we remain competitive on the other side of COVID-19,” Ms Hrdlicka said.

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