Virgin's billion dollar deal for 12 new planes

Sir Richard Branson in talks with manufacturers to buy or lease alternatives to the delayed Dreamliner
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The Independent Online

Sir Richard Branson's Virgin Atlantic is looking to place a billion-dollar order for 12 new planes to plug the gap that will be left in its fleet by delays to the launch of the Boeing 787 Dreamliner aircraft.

Recent strike action at Boeing, coupled with a raft of technical problems, including badly installed seat fasteners, mean the new plane will not now be launched until the end of next year at the earliest. Virgin had expected to take receipt of a $3bn (£1.9bn) order of 15 Dreamliners in 2011, but it seems Boeing's problems will delay the delivery until 2013.

British Airways, TUI, Monarch, Air New Zealand and Qantas have all placed orders for the new 787, which will be capable of flying from London to Australia without refuelling. A spokesman for Virgin Atlantic said the airline had already lodged a compensation claim with Boeing over the likely delay.

He said Virgin was now in talks with Airbus – whose A380 rival to the Dreamliner has also been dogged by technical issues – Boeing and a number of leasing companies about taking delivery of 12 planes to plug the gap and expand the Virgin fleet.

He added that the planes would be put into operation at Heathrow, Gatwick and Manchester, and allow Virgin to offer new long-distance routes to the likes of Rio de Janeiro and Bangkok. "It's a good time to be looking to buy or lease planes. "There's a lot of courting of airlines going on by the manufacturers."

Meanwhile, Virgin Atlantic confirmed it is still interested in tabling a bid for Gatwick, the UK airport put up for sale by airport operator BAA's owner Ferrovial. "We are still keen to be part of a consortium to buy Gatwick," said the Virgin spokesman. "We remain in talks with a number of airport owners and other potential partners, but I don't expect we'll say anything further on this until the new year."

A number of potential bidders – including the German group Hochtief; the Frankfurt airport operator Fraport; 3i infrastructure, Deutsche Bank's infrastructure arm; and Manchester Airports Group – have expressed an interest in the airport.

BAA will send an information memorandum to potential bidders later this month. The sale has come about through the Competition Commission's desire to break up BAA, which it believes holds a monopoly in the South-east, as it owns Heathrow, Stansted as well as Gatwick, which is expected to come with a £3bn price tag.

News of Virgin's search for a new 12-plane deal comes days after rival British Airways posted a 92 per cent fall in first-half pre-tax profits of £52m. However, shares in BA surged by more than 11 per cent despite the bad news. Chief executive Willie Walsh said the first six months of 2008 had been the "bleakest on record". BA will now cut back on a number of routes this winter and is offering redundancy to managers at the group.