Air NZ signs Virgin engineering contract

Air New Zealand's engineering division, ANZES, has won a three-year contract to provide maintenance for another of its rivals - this time Australia's Virgin Blue.

ANZES will provide complete heavy maintenance support for Virgin's fleet of 48 Boeing 737 NG jets.

It will do the engineering work at its narrow body aircraft maintenance facility in Christchurch where it also provides maintenance for the A320 and B737 fleets of Air New Zealand, Freedom Air, Pacific Blue and Jetconnect.

Virgin Blue's local wing, Pacific Blue, has been locked in a cut-throat price war with Air NZ and particularly its budget arm, Freedom. Air NZ did not say how much the contract was worth to the company.

Announcing half year results in February, the company said the airline maintenance and engineering industry was "under seige" from low-cost service providers in Asia, South America and Eastern Europe. The strong New Zealand dollar had also "squeezed the margins" of ANZES when it bid for such third party work.