Branson unveils £2.2bn deal for new planes - with more in the pipeline

Published on Wednesday 21 July 2010 22:53

VIRGIN America, part of Sir Richard Branson's aviation empire, yesterday announced plans to buy 40 new Airbus A320 aircraft in a £2.2 billion deal.

• Sir Richard Branson, on a video link from the Caribbean, announces the new order at the Farnborough Air Show. Picture: Getty Images

The agreement, which was announced on the final business day at the Farnborough Air Show, includes an option to buy a further 20 aircraft and will double Virgin America's fleet size.

If the memorandum of understanding signed between Virgin and Airbus is confirmed, deliveries will start in 2013.

Sir Richard, currently in the Caribbean, said : "I am happy to celebrate my 60th birthday this week and I can't think of a better present than getting 60 new planes."

The news capped a higher than expected order total of 18bn for the Farnborough Air Show, although the figure is well down on the record 58bn achieved during the last show in 2008.

Airbus chief operating officer John Leahy, told a news conference: "Ladies and gentlemen, the recession is definitely over. Liquidity is back in the market, traffic is back in the market and GDP growth is back.

"It looks as though we have turned the corner and that is why we are seeing strong growth."

He said airline figures showed that premium traffic was rebounding after slumping during the financial crisis.

"It went down when investment bankers and lawyers got fired, but they got hired back and planes are flying full again," he said.

Airbus said it would sell "north of 400" planes in 2010 compared with a previous target up to 300.

Virgin America's planned order came on the back of confirmation by RBS yesterday that its aviation leasing arm had ordered 53 Airbus A320s as part of a 5bn order.

The International Air Transport Association said this week airlines were growing more confident as economic recovery took hold, with financial performance at pre-crisis levels. It recently forecast that the global industry would make a small profit of $2.5bn (1.6bn) this year, after a huge loss of $9.4bn in 2009

The biggest buyer at this year's Farnborough show was Air Lease Corp which placed more than 5.6bn for aircraft from Boeing, Airbus and French-Italian company ATR.

Other buyers have included Thai Airways, Berlin-based airline Germania, Indonesian national carrier Garuda and Australian flag carrier Qantas Airways.

Meanwhile Europe's EADS, the parent company of Airbus and the world's second-largest aerospace group after Boeing, has said it is looking at several acquisition targets in the United States, particularly companies in the military services sector.

Sean O'Keefe, chief executive of EADS North America, said he expected the company to make a decision within the coming weeks whether to proceed with due diligence on any specific deals.

"There's several different potential targets that we're looking at," he confirmed at the air show.

He declined to give any details on the expected size of any acquisition, saying the companies that EADS is currently examining range widely in size.

EADS plans to increase its North American revenue to $10bn by 2020 from expected sales of around $1.5bn in 2010 and around $1.2bn in 2009.