Virgin America to lease 10 new Airbus A321neo aircraft

By Jeffrey Dastin

(Reuters) – Virgin America Inc said on Tuesday it will lease 10 Airbus A321neo planes starting in 2017, a move that could let the low-cost airline add flights from coast to coast in the mainland United States and to Hawaii.

In an interview, Virgin America Chief Executive David Cush said the deliveries, slated for early 2017 through the third quarter of 2018, will increase the carrier’s available seats by about 20 percent.

The single-aisle planes, the largest yet to enter Virgin America’s fleet, will be leased from GE Capital Aviation Services, the aviation leasing arm of General Electric Co. GE Capital Aviation Services had the planes on order from Airbus Group SE prior to Tuesday’s announcement.

Cush said the 185-seat aircraft will help Virgin America fly more travelers from the U.S. West Coast to slot-constrained airports such as New York’s John F. Kennedy International Airport. The planes also could fly between Los Angeles and Hawaii, he said.

He said he expects U.S. airfares to bottom out in the beginning of 2016.

The U.S. airline industry has experienced steep declines this year in unit revenue, or sales relative to flight capacity, as carriers added seats to undercut rivals and to take advantage of lower fuel costs, which has made it cheaper to operate flights.

“Seat supply will start to moderate after the first quarter,” Cush said of U.S. airlines’ domestic service.

However, Cush added, “It is not my expectation that unit revenue will return to 2014 levels yet.”

Virgin America earlier had indicated its interest in the A321 aircraft, noting it intended to expand its capacity by about 10 percent per year.

The airline, based in Burlingame, California, currently operates more than 50 smaller A320 and A319 planes.

(Reporting by Jeffrey Dastin in New York; Editing by Chizu Nomiyama and Will Dunham)

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