(Adds details, comments starting in paragraph 8)
LONDON, March 24 (Reuters) – Virgin Atlantic Airways Ltd plans to order two more A340-600 aircraft, recruit 1,400 staff, add new routes to Cuba and the Bahamas, and expand capacity on existing routes, the British airline said on Wednesday.
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The expansion plans for the next year come as Virgin Atlantic Chairman Richard Branson, whose business empire spans mobile phones, music stores and airlines, said there were encouraging signs commercial aviation was returning to health.
“Virgin Atlantic is entering a period of significant expansion with new routes, more capacity on existing routes and new aircraft,” the British billionaire, who owns 51 percent of the airline, said in a statement.
Sensitive to external shocks and economic cycles, much of the airline industry was plunged into a financial crisis after the Sept. 11, 2001 attacks on U.S. cities. The war in Iraq and the deadly SARS virus also hurt demand for air travel.
But Branson’s positive comments on air travel demand adds to the chorus of other airline and aerospace executives talking about a gradual industry recovery after three years of savage cutbacks. Virgin Atlantic cut 1,200 jobs in September 2001.
Branson said Virgin is optimistic about a recovery in aviation, adding: “London to New York is the touchstone route for business travellers and our performance has been incredibly strong in recent weeks. Across our network as a whole we’ve seen growth in our premium cabins of over 10 percent year on year.”
Branson said Virgin Atlantic’s pretax profit in the financial year to the end of February 2004 was “a little bit better” than the 15.7 million pounds ($29 million) reported for the previous financial year to the end of April 2003.
Virgin said it would order two more A340-600 wide-body passenger jets, taking its total order of the 380-seat aircraft powered by Rolls-Royce (London:RR.L – News) Trent 500 engines to 12.
Virgin Atlantic, in which Singapore Airlines Ltd (SES:SIAL.SI – News) owns 49 percent stake, is a launch customer for the A340-600, making the deal particularly important to Airbus (Paris:EAD.PA – News; London:BA.L – News).
Branson told reporters he expected to complete talks with Airbus and Boeing by the end of the summer for potentially 30 more A340s or Boeing 777s.
“Potentially it could be as much as 30 wide-body planes, even more,” Branson said, adding that the aircraft would start entering service in two years and some would be used to replace older A340s.
Branson said Virgin Atlantic would hire up to 1,400 new staff, including pilots, cabin crew, engineers and airports and office staff, over the next year. As many as 300 of those new jobs will be based at London’s Heathrow and Gatwick airports.
NO-FRILLS IN THE USA
Branson also plans to start up a low-cost airline in the United States and will begin talks with Boeing and Airbus next week for an order of up to 35 A320s or Boeing 737s.
He said the as-yet-unnamed U.S. no-frills carrier, which will have airline industry veteran Frederick Reid as its chief executive from early April, was expected to begin services early next year but he was hopeful it could start earlier than that.
Branson, who will only have a 49 percent interest in the U.S. start-up because of foreign ownership restrictions, said Virgin was also talking to regional jet makers Embraer (Sao Paolo:EMBR4.SA – News) and Bombardier (Toronto:BBDb.TO – News) about an additional 20 planes for short-distance flights.
He said the Virgin Group was in talks with an unnamed U.S. airline about acquiring some slots in the United States and could be interested in some assets at U.S. Airways (NasdaqNM:UAIR – News).
“If something happened there (with U.S. Airways) we might well find they become partners instead of us having equity partners. There also might be some equity partners but they (U.S. Airways) would become a major shareholder in the company,” he said.
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