KEY POINTS:
Air New Zealand has joined a list of airlines seeking millions of dollars in compensation from Boeing, after the third major delay in delivering the 787 Dreamliner.
Boeing has blamed production problems and is now promising first deliveries in the third quarter of next year, more than a year after the original target of May this year.
Air New Zealand has eight 787-9s on order, originally scheduled for delivery between 2010 and 2013, with the first 787s now likely to arrive in 2012. It's paying $1.68 billion for the aircraft, largely built of carbon fibre.
Chief financial officer Rob McDonald said the airline would now begin compensation talks.
"While disappointed, Air New Zealand has retained sufficient flexibility in its existing portfolio of leased and owned aircraft to ensure no capacity shortfall arises during this period," he said.
Qantas, which has ordered 65 of the planes, is seeking compensation and Japan Airlines and All Nippon Airways said yesterday they would consider such a move.
McDonald said Air New Zealand was yet to determine if there would be any impact on network expansion plans.
"We are obviously very disappointed that in the current environment of high jet fuel prices, we will not be able to take advantage of the significantly improved economics that this aircraft will provide in the timeframes we initially expected."
The aircraft has a range of up to 16,300km and therefore the capability to fly direct to South Africa, India, South America, Asia and deep into China and North America.
The Dreamliner also uses about 20 per cent less fuel than comparable aircraft and is a big part of the airline's drive to cut running costs.
Air New Zealand also has four 777-300ER aircraft on order from Boeing which will be delivered on schedule, in 2010 and 2011, allowing the airline to grow capacity over the period as planned.
Forsyth Barr research head Rob Mercer said that as all airlines were affected, the delay could work in Air New Zealand's favour. Rival airlines also hit by the delay would not be able to put on extra flights on the same routes if they did not have fuel efficient aircraft.
"This is a small market. No one is going to put on extra capacity so there is a hidden positive."
Mercer said Air New Zealand got a good price for the aircraft as a launch customer for the 787-9.
He said the compensation could range from $10 million to $15 million, depending on the purchase agreement.
Qantas has said it was entitled to "substantial damages", which would be used initially to offset the cost of lease agreements, he said.
Airbus had to pay hefty penalties after a two-year delay delivering its super jumbo A380.
Boeing said delays were caused by slower-than-expected completion of outsourced work, "unanticipated rework" and the addition of margin into the testing schedule.
Boeing Commercial Airplanes president and chief executive Scott Carson said test flights were expected late next year.
"Our revised schedule is built upon an achievable, high-confidence plan for getting us to our power-on and first-flight milestones.
"Also, while the fundamental technologies and design of the 787 remain sound, we have inserted some additional schedule margin for dealing with other issues we may uncover in testing prior to first flight and in the flight test programme."
Air New Zealand shares fell 3c to $1.34 yesterday.
HOLD-UP
* New delays mean the first Boeing 787 will not be delivered until late 2009, six months later than a recent forecast.
* Air New Zealand will not get the first of its planes until 2012 - two years behind schedule.
