Virgin orders 16 Airbus stretch jets

The Airbus plane-making consortium scored a huge coup over Boeing yesterday when Richard Branson's airline, Virgin Atlantic, signed a $2.5bn (pounds 1.5bn) deal to buy 16 of its new stretched A340 jets powered by Rolls-Royce engines.

The 375-seat aircraft, which compete head on with smaller versions of the 747 jumbo jet, will include accommodation on two decks, the biggest "bar in the sky" ever and, for the first time in a commercial airliner, double beds for some first class passengers.

"The new design will be a revelation. The bar will be for all passengers, not just first class and there could be a small play area and a gym offering work-out and massage facilities," said a Virgin spokesman.

In a blow to Boeing, Virgin is now almost certain to cancel an existing option to buy 8 of the Seattle giant's 777 long-range jets, though the airline insisted it was still committed to operating a Boeing fleet. But industry sources said last night the 777 option was "a dead duck".

Mr Branson, Virgin Atlantic chairman, signalled his apparent concern at Boeing's dominance in the airliner market, following its takeover of McDonnell Douglas. "Boeing make excellent aircraft, but it is in the interest of both the aircraft industry and the consumer for them to have a strong competitor," he said

Airbus has already built four different mock-ups of the first-class accommodation, which will be situated alongside the luggage hold underneath the main passenger deck. The A340 was originally designed to have direct access from the passenger lounge down to the hold.

The A340s, which cost about $150m each, will spearhead Virgin's expansion into the Far East. Routes under consideration include Korea, Bombay and adding Virgin planes on journeys to Australia alongside an existing code- sharing deal with Malaysian Airlines.

The order is the first for the A340-600 since Airbus revealed the design at the Paris Airshow in June. It means the consortium can now press ahead with production, with the final decision on whether to go-ahead, due by October, now a virtual formality.

Airbus was given another boost yesterday when Air Canada said it had signed a letter of intent to buy five of the new planes, with a final decision due by next March. It has also agreed an option for a further 10 A340s. In addition, Air Canada indicated it would buy eight more Airbus planes with 20 further options, mostly replacing ageing Boeings.

Like all stretched A340s, Virgin's planes, which will be delivered from 2002, will be powered by a specially developed version of the Rolls-Royce Trent engine, under what amounts to an exclusive engine supply agreement.

British Aerospace will make enlarged wings for the plane, which means over 50 per cent of the aircraft will be manufactured in the UK. The jets will seat 375 passengers, similar to older Boeing 747-200s but less than Virgin's five 747-500s. The A340s will replace Virgin's six 747-200s, adding 10 aircraft to its 20-strong fleet. It said it also intended to press ahead with options to buy another two conventional A340s.