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Virgin buys Rolls engines, sees no new US flights

Virgin Atlantic Airways said on Monday it would buy engines from Britain’s Rolls-Royce Group Plc worth $2.6 billion to power the fleet of Boeing Co 787 Dreamliners it ordered last year.

The deal, announced by Virgin Chairman Richard Branson in New York, includes 15 sets of installed Rolls-Royce Trent 1000 engines, four spares, and engines for another 28 787s, which Virgin has not yet committed to buy. Branson said the 787 planes might ultimately help Virgin expand its transatlantic services to other European cities. But he said his airline had no immediate plans to take advantage of the Open Skies aviation agreement, which will liberalize US-European travel when it takes effect at the end of March. “Ideally we’d like to be flying from a number of European cities,” Branson said on Monday. “At the moment, we have a shortage of planes,” he said, making it better to focus operations on its profitable London routes.

Virgin’s rival British Airways plans to start flights between mainland Europe and the United States in June. Branson said there would be similar possibilities for Virgin, when its starts taking deliveries of its Boeing 787s in 2011 if the Open Skies agreement is still in effect.

Open Skies Nigh
Last year the, United States and Europe Union agreed to put aside old bilateral arrangements and allow direct flights from any city in the 27-nation European bloc to any US city and vice versa from March 30. But European states have threatened to scrap the deal if the United States does not follow through on commitments to raise foreign ownership limits on US airlines and allow foreigners to run US domestic services by 2010.

Branson said he hoped the US Congress would have the courage to make sure the United States fulfilled its promise to open its aviation market, and called on them to be “brave” rather than protectionist. The chairman and founder of Virgin said he was not immediately interested in competing in the emerging market for all-business-class transatlantic flights. Virgin’s interests include rail travel, hotels, telecommunications and financial services. The recent crop of business-class only airlines are “all losing their shirts”, Branson said, adding that he was “watching with interest” to see if anyone could make money out of it.

British Airways is planning to launch twice-daily business flights from London’s financial district to New York, challenging start-ups Eos and Silverjet, which pioneered business-class-only flights in the last couple of years. The niche market has not been entirely successful. Start-up MAXjet, which also offered business-class-only flights, filed for bankruptcy protection last year.

Waiting on the 787
Last April, Virgin announced its order for 15 of Boeing’s new carbon-composite 787s, worth $2.8 billion at list prices, plus options and purchase rights on another 28 planes. Deliveries of the planes are due to start in 2011, but may be delayed as Boeing struggles to put the first few 787s together for test flights. The project is about nine months behind schedule. Virgin uses Rolls-Royce engines on its 19 Airbus A340-600 jetliners, but uses CFM International engines for its six smaller A340-300s. CFM International is a joint venture between General Electric Co and France’s Safran. Virgin uses General Electric engines on its 13 Boeing 747 jumbos. (Reuters)