Air NZ orders 772ERs and 7E7s

[oneWorld]

2 June 2004, The New Zealand Herald

Air NZ to spend $1.35b on new Boeing long haul fleet

Air New Zealand today announced plans for a $1.35 billion makeover of its long haul fleet that will allow to operate more economically and open new routes to China and India.

It said it would purchase four new Boeing 777-200, two 7E7s and lease a further four 777-200s.

"Today marks one of the most exciting and pivotal moments in Air New Zealand's history," chief executive Ralph Norris told media and analysts in Auckland.

The announcement marks the second phase of the national flag carrier's rejuvenation following its $885 million bailout by the Government in 2001 and the shakeup of the industry in the fall-out from the September 11 attacks.

The company had adopted a new low cost business model on domestic, trans-Tasman and Pacific routes, relying heavily on its new fleet of cost efficient Airbus A320 aircraft. The airline had also been considering Airbus aircraft to replace its ageing long-haul fleet of Boeing 747s and 767s.

Chicago-based Boeing was chosen as supplier after an "exhaustive and robust 18 month evaluation process," Mr Norris said.

The deal includes an option for Air NZ to buy up to another 42 long haul aircraft.

Air NZ must get shareholder approval for the deal because of the size of the deal but that is a shoo-in given the Government's 82 per cent holding. Mr Norris said Air NZ would fund the purchases internally but the airline also planned to take up the option of $150 million of extra funding offered by the Government in addition to its $885 million 2001 bailout.

It would be part of a pro-rata rights issue that would net the company roughly $183 million all up. Air NZ had cash reserves of $894 million at the end of last year.

"We have -- within our existing resources and forecast cash flows -- the ability to fund these purchases. With some bank debt and financings, which we have no doubt that we will be able to raise, it's well within the servicing capabilities of the company," Mr Norris said.

Air NZ said the new Boeing aircraft would allow it to develop new routes and increase frequency on existing routes, as well as providing an overall increase in passenger and cargo capacity.

Operating costs and financial performance would improve.

Four of the new 300-plus seat Boeing 777-200 ER aircraft will be leased from International Lease Finance Corporation.

The purchase and lease of the eight 777 aircraft along with the necessary infrastructure to maintain them would cost more than $1 billion.

The first five aircraft were expected to be delivered between September next year and April 2006, with the other three introduced in the last half of 2006.

Meanwhile, the delivery date for the two smaller 7E7 aircraft, capable of carrying about 230 passengers, was still to be determined, but it would coincide with the retirement from service of the remaining 767s.

The cost of the 7E7s and necessary infrastructure to support them was more than $350 million.

The 7E7, Boeing's first all-new passenger jet in a decade, was designed to save cash-strapped airlines money on fuel and operating costs. It will use up to 20 per cent less fuel than other aircraft of its size, travel at speeds similar to today's fastest wide body jets and carry up to 50 per cent more cargo than today's similar size aircraft.

The decision to secure options to buy a further 42 aircraft reflected its belief in the potential to expand its long haul passenger and cargo business, Mr Norris said.

UBS Warburg regional airline analyst Timothy Ross described the securement of the options as "a little punchy".

"Options cost you nothing but they do lock in price. The more options you have, clearly the better bargaining you have on price".

Air NZ group general manager Rob Fyfe said the decision to buy now was to take advantage of a buyers' market.

The initial acquisition of the 10 aircraft would increase Air NZ's long-haul seat capacity by 20 per cent by early 2007.

No decisions had been made on new routes but from Auckland the 777 could reach China, South America and much of North America.

"The 7E7 will push this boundary out even further and open up more destinations in each of these locations."

UBS's Mr Ross told NZPA these were "legitimate growth options".

"Clearly China is a market that most airlines have got firmly on their radar as providing potential growth."

He also said it was likely Air NZ would like to capitalise on its US West Coast franchise.

He saw little growth opportunities in the UK or Europe unless the airline was able to secure additional landing rights.

Mr Ross saw few implications in today's announcement for Air NZ's proposed alliance with Qantas which has chosen Airbus aircraft for its future long haul fleet requirements.

Air NZ shares which were placed in a trading halt before the market opened pending the announcement closed one cent down at 41 cents.

- NZPA

[nwa757]

Yay! I'm so happy the 7E7 is getting more orders!

Now when will NW get some of these to replace those A330s?

(Note: This was intended as a joke. I was not being serious when I made the last comment.)

[Avro]

Now when will NW get some of these to replace those A330s?

(Note: This was intended as a joke. I was not being serious when I made the last comment.)

Before NW should think to replace the A330's they should find a replacement for those old diesel 9's The DC-9 is a great plane but way to thirsty in my opinion

Anyway, it's nice to see more orders for the B7E7.

Does soemone know when Boeing will give the B7E7 its final name. Will it be the B787 or the B808. Personally I wish the B808.

Ciao
Chris
8)

[A318]

As far as I know it will stay the 7E7 to show the economic profit this plane has.
Oh yeah, so funny Airbus now comes with a lite version of the A330, I think they already feel they did something wrong with their A380 future plan.
Go for it Boeing!!!!!

Greetz,

Erwin


Erwin

[nwa757]

Now when will NW get some of these to replace those A330s?

(Note: This was intended as a joke. I was not being serious when I made the last comment.)

Before NW should think to replace the A330's they should find a replacement for those old diesel 9's The DC-9 is a great plane but way to thirsty in my opinion

Yea, I guess you're right. NW needs to loose the DC-9s first. I guess they are going to be replaced by more A320s and A319s but right now, the A320 line is way too full and it will take a long time for them to replace the 120 or so DC-9s that are left in the fleet.

Btw: sorry for being fftopic:

[Avro]

As far as I know it will stay the 7E7 to show the economic profit this plane has.
Oh yeah, so funny Airbus now comes with a lite version of the A330, I think they already feel they did something wrong with their A380 future plan.
Go for it Boeing!!!!!

This is not completely true Erwin !!

Airbus saw that there is a market fro the B7E7 and therefore proposed to make the A330 lite. But this has nothing to do with the A380!!! Don't mix up things.

Greetz
Chris
8)

[Buzz]

Yay! I'm so happy the 7E7 is getting more orders!

More orders would be great, but am I the only one thinking it was a 8 + 2 for free thing? I wouldn't expect them to buy 50, but two is so low I find it suspicious... I hope the options are for more 7E7's, and the do take them up, because there isn't much logic to a fleet of 2 7E7's if you have 747 & 777, is there?

Slightly of topic, but is it staying 7E7? no 787 or 818?
catchy name, but would there be 7G7 & 7Q7's in the future?

[bigjulie]

Air New Zealand is showing it's loyaty to Boeing, after all they had/have:
16-747's
24-767's
53-737's
+
They have further options on 42 other Boeing planes as well

They also have: 15 A320's: 7 of which are in use or owned & 8 are on order.
So obviously they have strong support for Boeing!
I would like to see what Comet makes of this news.

[SubZero]

Am I the only one that doesn't like the 7E7? now it's not because it is made by boeing because my second favorite plane is the 777 but I ..

I don't know I'v just got a weird feeling when I see that plane..

maybe my thoughts will change after I'v seen in in real.

I see the 7E7 as an other attempt to create a new airliner and I am used on seeing the program cancelled after a while just as the sonic cruiser.
but by the looks of it the 7E7 will fly.

(this is a bit off topic isn't it? )

anyway, nice to see air NZ ordered some 777 too, but I don't think there sheme will look good on it..

[Avro]

It's not that off topic, don't worry

Personally I don't really like the looks of the B7E7. But on the other hand I don't think that it'll come out like on the computer made pictures.
The point I'm more conserned about is that boeing claimed to build the plane with entirely new materials and features.
But on the otherhand, they never mentioned one thing about those "new features" or "new materials" What will really be new ???? Will they really build the aircraft with the specifications they said ???? Will the B7E7 have the desired performance, or not ???? Those are my real doubts and questions.

This being said, it would be great if they succed with the B7E7 and if they get a bit more competitive again against Airbus.

Greetz
Chris
8)

[Sabena_690]

As far as I know it will stay the 7E7 to show the economic profit this plane has.
Oh yeah, so funny Airbus now comes with a lite version of the A330, I think they already feel they did something wrong with their A380 future plan.

Actually, I don't see the link between the A380-Airbus being scared-B7E7 but anyway...
x I wish Boeing the best with the B7E7, it would be nice to see again some more Boeings on the EU market
x there have as far as I remember been plans for an A330lite already for quite some time now. It is thanks to the competition between Airbus and Boeing that both produce excellent planes today. As you see: the A330 has proved to have an excellence performance, it's an excellent plane in general. Now Boeing comes up with something better (at least when we compare the figures they provide us, although the plane hasn't flown yet), Airbus is again reacting with a better plane (which will lead again to improvements of Boeing etc etc). Nice to live in a capitalist world, huh?
x although I believe that the performance of the B7E7 will be excellent, I will not use slogans like 'the best economic plane in the world'yet. The aircraft hasn't flown yet, and the past has proven enough that those figures will have to be adjusted (only think about the MD11)
x (personall opinion): I don't really like the design of the B7E7... looks quite strange. Not that I really care since comfort inside is more important (for me at least, don't know what you guys think)

Frederic

[IL62M]

I really dont like the 7E7 although I really like the 777 and 747 SP.For this reason I do not want to state any comments.

[Comet]

Bigjulie wanted my comments, so here they are

I don't think the 777 is a good buy to be used on the routes LHR-LAX-AKL/SYD. From what I remember these routes are very popular and fill a 747-400, so what sense is there is replacing them with aircraft with smaller capacity? Probably on the routes from AKL which call in at the Pacific Islands (Tonga, Samoa, Fiji, Cook Islands and Hawaii) on the way to LAX they would be ideal, as sometimes the capacity of the 767 which was used on those routes was a little small.

Before the 747, ANZ was a DC10 operator until they had the Mount Erebus accident. Then they went all-Boeing until the arrival of the Airbus. But I think they should look to replacing 747 with latest 747 and not something with a smaller capacity.

And, from a purely personal viewpoint, I think the 777 is grossly over-rated in appearance, I don't think there is a livery which suits it and I don't know why people rave about the type to be honest.

[nwa757]

And, from a purely personal viewpoint, I think the 777 is grossly over-rated in appearance, I don't think there is a livery which suits it and I don't know why people rave about the type to be honest.

I agree with you there. The 777 is really overrated. There is really nothing special about it other than the fact that it was designed on a computer. I think that it is a good airplane that does it's job, but it isn't really special.

As far as looks go, it isn't real different from an A330 or 767. Personally I would rather fly on a 747 or DC-10 (luckly my airline has both! ).

But like I said, it is a good airplane that serves it's purpose.

[Comet]

I agree Trevor - the 777 is a functional aircraft which does the job it is designed for, but it is not a head turner in terms of looks. It has no distinctive feature which sets it apart from other similar aircraft. From a photographic point of view, I prefer the A330 (superb head on view with its huge span), A340 (very elegant), 747 (just superb ) and 767 (also very nice head on, as I found out in BHX with a BY example). There was an EK 777 there in BHX on the same day, and the only way it was noticed was the fact that it was bigger than its two "companions" in the same area of the terminal (a 737 and an ERJ). It was certainly not beautiful.

[Avro]

I agree with both of you that the B777, is overrated BUT it still has a few "features" that are quite impressive when taking pictures of it.
There are 6 wheels on each set of main gears, and the GE90 is a huge engine. But except for that, the plane doesn't look really special.

Chris

[V-Bird]

If it`s aint boeing, we are not going!

Well i think that Boeing proove that they have much more experience then Airbus. I am not anti-airbus, but i think that a lot of country`s ( read: forums, spotters, etc. ) think that airbus won the race, but Boeing proove that they are still in business with the 7e7!

To Sabena-690.

As a former Martinair / KLM maintance trainee, i can only say that the MD-11 and the 757 are one of the "better " planes in maintance figures. Also rthe performance of both aircrafts ar realy great. The nickname of the 757 is world wide " the sportscar " because of her great performance. The problem with the MD-11 is that it was the first " boeing " with a glass cockpit. Did you know that the Glass-Cockpit from the MD-11 was a tetsbed for the glasscockpit from the 737 NG???? it`s true!!

With Martinair Cargo ( MD-11 and 747 classic ) and KLM ( comparing the MD-11 and the 744 ) the md-11 was in both cases much relaible then both other planes, so it isnt a bad plane at all!!

[Avro]

Well i think that Boeing proove that they have much more experience then Airbus. I am not anti-airbus, but i think that a lot of country`s ( read: forums, spotters, etc. ) think that airbus won the race, but Boeing proove that they are still in business with the 7e7!

Boeing has indeed a lot of experience, but Airbus does too. Both manufacturers build great planes that are efficient and comfortable.
I never said that Airbus won THE race. But for the moment Boeing is selling less than Airbus for several reasons. The B7E7 program could help them to recover and challenge Airbus again to built some newer planes with newer technologies. Like Sabena_690 allready mentioned.
It's not a "race" since there won't be any winner. Every now and then you'll have Airbus having the lead and after that Boeing again. Each time the "second" manufacturer will have to build something NEW to get the lead again. And that's what's very important, isn't it ?

Greetz
Chris
8)

[V-Bird]

To Avro : i totaly i gree BUT

Airbus: is selling more planes
Boeing : has sold the most planes in total. ( i read in a news paper, the financial times, that there are even more 737`s flying at the moment then all build airbusses in total at the moment )

I hope that you see my point.........

[Avro]

I see your point

Chris