Airwork said today lease agreements for up to 10 years had been signed for the eight aircraft already acquired; the leases would start as the cargo conversion process was done.
This includes installing a large cargo door and loading system, and a complete avionics upgrade.
Toll Group will take delivery in Australia of two 737-400s by February next year. These two aircraft will replace two Airwork-owned 737-300s currently operated for Toll, part of an extended contract recently agreed between the two companies that will see Airwork continue to provide Toll's Australian express airfreight business.
Airwork has an option to provide a further 737-400 aircraft next year to potentially replace an existing 737-300.
The remaining three 737-400s have been leased for 10 years to a joint venture between Airwork and Freightways subsidiary Fieldair, which is to operate a new freight network covering Auckland, Palmerston North and Christchurch. The joint venture's initial customers will be Freightways' express package business and NZ Post subsidiary Express Couriers.
Airwork chief executive Chris Hart said in a market update the move to 737-400s would help to upgrade New Zealand's express freight network.
Capital spending to date was $55 million funded from Airwork's cash flow and existing debt facilities.
He said next year would be "transitionary" as there was spending on freight conversions and new aircraft are introduced but there would be immediate benefits to Airwork's bottom line.
The programme has taken Airwork's fixed wing fleet of 737 aircraft from nine to 17 in the last financial year. Airwork's helicopter business is also continuing to grow. Airwork has added six helicopters to its fleet this financial year, making a total of 38. Some of the fleet is operated directly by Airwork, with the majority leased out to operators.
Airwork shares closed last night at $3.15 and during the past year shares have traded between $2.39 and $3.40.
