Virgin Australia (VA, Brisbane International) CEO Jayne Hrdlicka has indicated an expansion of the airline's small international footprint may be on the cards ahead of a possible IPO in 2023.
"We’re looking at a world of possibilities and extending our reach,” Hrdlicka said during the Flight Centre Illuminate conference in Sydney on October 20. “We’re very focused on our B737 aircraft footprint. We’ve got B737-700s and -800s, and we’ve got MAX-8 and 10s coming into the fleet that gives us a bit more range, and so we will be adding to the network.”
Virgin Australia's current international network includes Denpasar, Nadi, Port Vila, and Apia Faleolo, with Queenstown International flights restarting in November. Before the pandemic, the airline flew to destinations further afield, including Los Angeles International and Hong Kong International using B777-300ERs and A330-200s. However, after the airline's 2020 collapse and subsequent sale to private equity firm Bain Capital, a leaner Virgin Australia now only operates B737s and has scaled back its international flying.
Hrdlicka didn't specify what new or returning international destinations were under consideration, but the absence of widebody aircraft limits the ability of the airline to fly long haul. However, the existing B737-800 fleet will be boosted by the arrival of four B737-8s in early 2023 followed by the first of twenty-five B737-10s in mid-2023.
Before the pandemic, Virgin Australia had secured slots at Tokyo Haneda and planned to begin flights from Brisbane at the start of the 2020 IATA summer flying season. Covid-19 scotched those flights before they began but until now, Virgin Australia has retained its Haneda slots, enjoying a waiver on the usual use it or lose it requirements. However, as the airline industry recovers, those waivers are soon to expire and there is some speculation that in order to retain those hard-fought-for slots, Virgin Australia will indeed start flying to Haneda.
In the interim, Hrdlicka is enthusiastic about the strong current passenger demand and rising yields, saying the recovery is not "a short-term sugar hit."
"The total market demand right now feels about what it should be if the music hadn’t stopped. If you look at GDP growth from 2019 to now, the capacity is not quite there yet but underlying demand is where you’d expect it to be,” she said.
Virgin Australia's recovery and expected 2H 2022 profit has intensified speculation of a 2023 IPO. This would allow Bain Capital to sell down its stake at a time when earnings are strong and their return on investment can be maximised. Hrdlicka, who doesn't rule out an IPO, would not be pinned down on a timeline for one.
