Virgin launches pounds 1bn plan to double aircraft fleet

VIRGIN ATLANTIC is poised to embark on a pounds 1bn expansion of its aircraft fleet in readiness to start operating intercontinental routes it expects to pick up from British Airways.

The order programme will double Virgin's fleet to 16 aircraft and provide a fillip to hard-pressed aircraft manufacturers including Airbus Industrie, the European consortium in which Britain has a 20 per cent stake.

All the aircraft - a mixture of Airbus A340s and Boeing 747-400s and 777s - will be leased and will replace Virgin's ageing fleet of B747-200s, giving it one of the youngest and most advanced fleets of any carrier.

The first addition to the Virgin fleet will be four or five Airbus A340s which had been due for delivery to Northwest Airlines until the US carrier cancelled its order for 24 of the aircraft late last year.

Richard Branson, chairman of Virgin Atlantic, plans to put them into use first between London and San Francisco - a 'long thin' route ideally suited to the A340, which has a range of up to 7,350 miles carrying 260 passengers.

Virgin has a licence for the route but not for the crucial take-off and landing slots at Heathrow needed to launch a service.

Extra slots to enable Mr Branson to begin a daily San Francisco service is one of the concessions he hopes to wring from BA in discussions now taking place to compensate Virgin for the 'serious commercial damage' done by the BA dirty tricks campaign.

Virgin now operates from Heathrow to New York JFK, Tokyo and Los Angeles and from Gatwick to Boston, New York Newark, Miami and Orlando. It also has licences but not slots for Johannesburg, Chicago, Washington, Sydney and Singapore.

Under British aviation law BA is able to transfer slots to another British carrier provided they are used for an inter-continental service, although such a move would almost certainly be contested by rival long-haul carriers at Heathrow.

If the Civil Aviation Authority is pushed into conducting a hearing into any transfer, Virgin will argue strongly that having two British carriers on the San Francisco route would enhance competition. BA plans to increase its flights to San Francisco from one to two a day this summer.

The first stage of Virgin's fleet expansion is due to be completed in the next six weeks with the announcement of the A340 order. The aircraft, due to enter service this spring, is the latest in the Airbus range and will also be used by Virgin on its Newark and Boston routes.

The 747-400 is the latest version of the Boeing jumbo while the 777, a wide-bodied twin-engined aircraft seating up to 390 passengers, enters service in 1995.

Virgin will use these two aircraft on denser, more popular routes such as New York JFK and Tokyo.

Following a face-to-face meeting between Mr Branson and Sir Colin Marshall, BA's chief executive, last Monday representatives of the two airlines have begun detailed discussions. These are expected to last at least another week.

Mr Branson has hinted that he may take legal action against BA in the US courts and through the European Commission if the talks fail to produce the required result.

BA controls nearly 40 per cent of slots at Heathrow, the world's busiest international airport and also one of the most congested, so it could afford to cede some slots to Virgin.

The difficulty for BA is that the routes on which Virgin wants to compete are among BA's most lucrative. Its Johannesburg service, alone is estimated to make a profit of pounds 30m a year. Out of BA's total operating profit of pounds 344m last year, pounds 119m came from the Americas.