Air New Zealand (ANZ) has picked Boeing to replace its aging 767 fleet as the last phase in the airline's overhaul and has become the second customer for the 7E7 in the process.
The carrier has agreed to acquire eight 777-200ERs and two 7E7s, with options for up to 42 more long-range jets. The first 777 will arrive by September next year as ANZ begins to phase out its 12 767s.
Long-haul operations are the last phase of ANZ's revamp, which started with its launch of low-cost domestic service after the airline's near-collapse in 2001. It has since restructured trans-Tasman flights to Australia and its Pacific Islands service. As part of its long-haul revamp, ANZ is also refurbishing its eight 747-400s at a cost of NZ$20 million ($12 million) each. Choosing a 767 replacement is the final step in this process.
Ralph Norris, ANZ's chief executive, says selection of the 777 and 7E7 over Airbus jets came down to a route-specific analysis. Airbus offered lower prices, but Norris says operating costs of the Boeing aircraft were lower on ANZ's routes. Norris has previously complained that the range and capacity of the 767 did not fit such potential markets as Shanghai. ANZ expects to deploy the 10 new jets on Asian and US routes, although South America is also possible. The 20% capacity boost fits with ANZ's most conservative growth forecast.
ANZ appears confident of its ability to finance this NZ$1.35 billion order. It will buy four of the 777s outright and lease the other four. ANZ has about NZ$1 billion cash on hand, and expects to end this financial year with a NZ$220 million profit. Analysts claim it could be higher. The airline plans no dividend. Instead, in the financial year starting 1 July it expects to take up the option of NZ$150 million in new capital promised and budgeted by New Zealand's government, which owns 81% of the flag carrier. At the same time ANZ plans a pro rata rights offering that should raise another NZ$35 million.
Norris says the decision by Qantas, ANZ's potential alliance partner, to order Airbus A330s and A380s did not enter into ANZ's evaluation.
DAVID KNIBB BRISBANE
Source: Airline Business
