Air NZ to buy four boeing 777-300 longhaul aircraft

By NZPA

Friday 3rd August 2007

Air New Zealand said today it is purchasing four Boeing 777-300 long-haul aircraft, and has options on a further three.

The four aircraft, due for delivery by 2011, have a list price of $1.1 billion, but were purchased at a discount, Air NZ chief executive Rob Fyfe said.

The purchases, in addition to the eight Boeing 787 Dreamliners on order, would extend the range, capacity and fuel efficiency of the Air NZ fleet, Fyfe said.

"The purchase rights for the 777-300ERs were obtained from Boeing in 2004, and the confidence we showed in the future of Air New Zealand when the aircraft purchasing market was at the bottom of the cycle three years ago has really paid off," Fyfe said.

Air NZ has now committed more than $2.6 billion to long haul fleet investment.

The airline will move to a full 777 and 787 twin engine fleet for long haul flights around 2012, phasing out the Boeing 747 and 767s as the new aircraft are introduced.

The Boeing 787 is 20% more fuel efficient than other long-haul aircraft, while the 777s are 16% more efficient than the 747s.

The 777-300ER can seat around 50 more passengers than the 313-seat 777-200ERs in its fleet.

Air NZ said it planned to fund the purchase through a mixture of cash and debt.

At its interim result in February, the airline said it had completed the first stage of a three-year, $2.6 billion capital investment programme with over $1 billion still in the bank and a debt ratio of just 46.7%.

While the aircraft were cheaper to run and maintain, the purchases did not herald a fall in ticket prices, Fyfe said.

The airline also did not expect to drop its fuel surcharge for passengers.

"A number of airlines are in the process of introducing additional fuel surcharges. We've got jet fuel price today back up at record levels.

"Hopefully these sorts of decisions may preclude us having to introduce further surcharges, but we're talking today about aircraft that are going to be introduced in three years' time, so I struggle to be honest to figure out what the fuel price is going to do in three months' time," Fyfe said.

Jet fuel remains the airline's most significant cost.

Shares in majority government-owned Air NZ were down 2.3% at $2.60 today, having traded between $1.08 and $3.13 in the last 12 months.

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