Virgin Atlantic orders 15 787s, teams with Boeing on biofuel

Boeing announced today that Virgin Atlantic ordered 15 of its 787 Dreamliners and said it is partnering with the London-based carrier to develop a new biofuel for commercial jets as part of efforts to reduce carbon emissions.

The 787 order, which Boeing previously disclosed but did not identify as coming from Virgin, is worth $2.8 billion at list prices and about $1.8 billion with standard discounts as estimated by aircraft-valuation firm Avitas. It is the largest European order to date for the Dreamliner, which is due to enter service in 2008.

Virgin also took options for eight 787s and purchase rights for 20 more of the aircraft, which Boeing is touting for its increased fuel efficiency.

The 787-9 burns around 27 percent less fuel per passenger than the Airbus A340-300 aircraft it will replace, thanks to its partial use of lightweight composite materials instead of metal. The planes will be added to Virgin's fleet beginning in 2011, officials said.

Boeing executives and Virgin Atlantic Chairman Richard Branson announced the orders and the partnership at a news conference. They said they hope to launch a test flight of a biofuel-powered 747 in the next year.

Officials at both companies declined to comment on the value of their investment in the biofuel project, which follows a similar airline industry initiative.

"We look forward to finding and testing alternative fuels and developing and implementing solutions that will reduce emissions both in the air and on the ground," said Boeing CEO Jim McNerney. "This is important work with high objectives."

It could take at least five years before any jet biofuel is widely available for commercial flights.

Branson said he hopes the new fuel will reduce the overall pollution generated by the airline industry, which is responsible for about 2 percent of the world's carbon emissions.

"We all have a responsibility whether as airline owners, airline manufacturers or engine makers to reduce that carbon footprint, which has grown over the years," he said. "Doing nothing should not be an option."

Separately, Air Canada said it is increasing its Dreamliner order to 37 from 14, making it the largest North American customer for the plane. The revised agreement includes options for 23 more 787s. The new aircraft will replace its existing Airbus A340s and A330s and Boeing 767s. Those planes are scheduled to be delivered in 2010.

Boeing shares were up 3 cents to $93.67 at the close of trading on the New York Stock Exchange after reaching their latest all-time high of $94.96 earlier in the session.