Air NZ beats most of world to new Boeing 7E7

By MATHEW DEARNALEY


Air New Zealand has become the second customer for a new generation of Boeing aircraft after signing a watershed fleet replacement deal in Auckland yesterday.

It will spend about $1.4 billion on two of the American planemaker's 7E7 "Dreamliners" as well as eight Boeing 777-200 ER (extended-range) twin jets, four of which it will own (the rest will be leased).

The airline is promising more comfortable seats and no increase in airfares as a result of the deal.

Group general manager (airlines) Rob Fyfe said cost savings from the new planes would allow Air New Zealand to hold fares instead of increasing them.

All passengers - not just those in first or business class - would be able to watch personal television on the back of the seat in front of them.

The deal, which still needs shareholder approval under stock exchange rules, shows how far Air NZ has come since a $1 billion Government bailout in 2001 to stop it collapsing after its Ansett Australia subsidiary failed.

Passengers can expect to see the first 305-seater 777 flying here by September next year, and the eight aircraft of that type will boost Air NZ's long-haul seating capacity by 20 per cent within three years.

They will fly faster and further than the Boeing 767s they are replacing, allowing options for new routes such as to China as well as greater frequency to cities such as San Francisco. Air NZ will start flying 747 jumbos there from the end of this month.

Boeing will deliver its first 7E7 to Japan's All Nippon Airways in 2008, but Air NZ has lined up ahead of the rest of the world's airlines as its second "launch" customer.

This means a healthy although undisclosed discount, and a say over final design details.

The overall deal also includes rights for the carrier to order up to 42 more long-haul aircraft in the next 12 years at today's discounts on a buyer's market.

Air NZ is unlikely to receive its two 7E7s before 2010, by which time it will have made tough decisions about how to replace its eight 747 jumbos, possibly with 380-seat Boeing 777-300s.

But choosing the 7E7 noses the airline in the direction of more frequent trips to more destinations than would be offered by the 550-seater A380 "mega" jets of Boeing's arch-rival, Airbus Industrie.

Air NZ chief executive Ralph Norris says the deal provides a solid platform for the airline's growth strategy in the tough aviation world.