Airline to purchase
eight 777-200ER's and two 7E7's
Air New Zealand today signed agreements to acquire eight new
Boeing 777-200ER and two Boeing 7E7 aircraft as well as rights to
purchase a further 42 long-haul aircraft. Given the size of the
transaction, under Stock Exchange and Companies Act rules, Air New
Zealand will be required to seek shareholder approval.
Air New Zealand's
Managing Director and Chief Executive, Ralph Norris, said the
Boeing aircraft will provide the airline with new capabilities for
its long haul operations. "These aircraft will allow us to develop
new routes and increase frequency on existing routes as well as
provide an overall increase in both passenger and cargo capacity.
Another benefit is that the new fleet will provide Air New Zealand
with lower operating costs and improved financial performance over
and above that which could be achieved by expanding the existing
fleet of 10 Boeing 767s," Mr Norris said.
Four of the new 300-plus seat Boeing 777-200ER aircraft will be
purchased and the other four leased from International Lease
Finance Corporation. The cost of the four aircraft and the
necessary infrastructure to maintain the fleet of eight is in
excess of NZ$1-billion.
The interiors for these new aircraft will mirror the soon-to-be
unveiled upgrade for Air New Zealand's Boeing 747s.
The eight Boeing 777-200ER aircraft will begin entering service
in September 2005, with the first five expected to be delivered by
April 2006. The final three aircraft will be introduced in the last
half of 2006. All the aircraft will be powered by Rolls Royce Trent
800 series engines.
Mr. Norris said the decision to purchase the Boeing 777-200ER
and 7E7 represents the next phase in Air New Zealand's commitment
to transforming its business. The first phase was the introduction
of Domestic Express, Tasman Express and Pacific Express and the
corresponding introduction of its new Airbus A320 fleet.
The delivery date for the two 7E7 aircraft, which will be
capable of carrying approximately 230 customers, is still to be
determined, but it will coincide with the retirement from service
of the remaining 767s. The cost of the two aircraft and necessary
infrastructure to support them is in excess of NZ$350 million.
Air New Zealand's 7E7s will be powered by the revolutionary new
Rolls Royce Trent 1000 engine. Air New Zealand is the first airline
in the world to place an order for engines to power the new Boeing
7E7.
"The decision to commit to the 7E7 and the Rolls Royce Trent
1000 is a clear signal of where Air New Zealand is positioning
itself - innovative, efficient and delivering the best products to
customers," said Mr Norris.
The Boeing 7E7 will use up to 20 percent less fuel than other
aircraft of its size. It will travel at speeds similar to
today's fastest wide bodies and feature innovative technology that
will give passengers great comfort. It will also carry up to
50% more cargo than today's similar size aircraft.
Boeing's Senior Vice President International Sales Doug
Groseclose commented that the 777 and 7E7 families of
aircraft are going to help Air New Zealand "change the game in the
South Pacific."
"By choosing Boeing for its future wide-body fleet, Air New
Zealand will lift the bar for passenger comfort and choice and
operating efficiency. These two aircraft will give Air New Zealand
tremendous flexibility in terms of great onboard service and the
ability to profitably open new routes," Mr Groseclose said.
Mr. Norris said
that Air New Zealand's decision to secure rights to purchase a
further 42 aircraft reflects the airline's belief in the potential
to expand its passenger and cargo business into new long haul
destinations and increase traffic from existing core routes.
"The purchase rights will give us the ability to choose from a
range of aircraft types that best suit our long haul business as it
develops in the future. The aircraft options will include the
Boeing 777-200ER, 777-200LR, 7E7 and the 777-300ER, which could
replace our Boeing 747s in about a decade," he said.
Air New Zealand's long haul fleet currently comprises of ten
Boeing 767s and eight Boeing 747s. By early 2007 the fleet
composition is expected to be eight 777-200ERs, seven 747s
and five 767s, as leased aircraft will be returned as
contracts expire.
To put this into a passenger and cargo context, Air New
Zealand's long haul fleet currently consists of 5408 available
seats and 268 tons available capacity across 18 aircraft. By early
2007, the fleet will consist of 6466 available seats and 291 tons
available capacity across 20 aircraft. This represents a 20%
increase in seats for long haul aircraft.
Mr Norris said this growth is consistent with the airline's
capacity growth goal of 5 percent, given the network base year of
2003. "A low growth network scenario has also been modelled. The
firm commitment to aircraft that has been announced represents a
minimum of aircraft that will be required by Air New Zealand going
forward, and also falls below the amount that would be required
under a low growth scenario," he said.
Mr. Norris
added that a team of senior managers has spent the past 18
months conducting an exhaustive evaluation of the aircraft options
available from both Boeing and Airbus. The Air New Zealand Board
has been regularly updated during the process. "The intensive and
robust evaluation process highlighted that both the manufacturers'
products were capable of meeting Air New Zealand's requirements,"
said Mr. Norris. "But on balance the Boeing aircraft best fits our
long haul and business needs. This same exhaustive process two
years ago found that the Airbus A320 was the best fit for our short
haul needs and as expected the aircraft is performing to
expectations and has proven to be the right choice for the
airline."
Mr. Norris also added that Air New Zealand looks forward to
continuing to work closely with Boeing and Airbus as it seeks to
consolidate and grow its business in both the short haul and long
haul markets.