UPDATE 1-Air New Zealand to replace Boeings with Airbus A320s

WELLINGTON, Nov 3 (Reuters) - Air New Zealand will buy 14 new Airbus planes at a cost of around $1 billion to replace its domestic fleet of Boeings, the national carrier said on Tuesday. The move follows what European planemaker Airbus called an "intensive and robust" face-off between the world's only makers of large passenger aircraft as airlines remain mired in recession. Air New Zealand said it would buy 14 Airbus A320 single-aisle jets to replace its current fleet of 15 Boeing 737-300s. Both models are used for short to medium routes. The planes are worth $1.08 billion at list prices. In France, Airbus said the planes would be powered by engines supplied by International Aero Engines, a consortium led by Rolls-Royce and Pratt & Whitney and also grouping Germany's MTU as well as a trio of Japanese heavy engineering firms. IAE competes with CFM, a joint venture between Safran and General Electric, for A320 engine deals which are negotiated separately with airlines. Air New Zealand said the A320s would begin arriving in January 2011 and be delivered progressively until 2016 to coincide with the expiry of 737-300 leases. Shares in Air NZ, which is around 76 percent owned by the government, closed up 1.6 percent at NZ$1.3. So far this year the stock has gained around 38 percent compared with a 17 percent rise in the benchmark NZSX-50 index. Airbus parent EADS fell 1.4 percent, tracking a weaker European market. Airbus and Boeing are heading for a sharp drop in orders this year as the airline industry gropes its way through the worst downturn in decades. Airlines lobby IATA said on Tuesday that the financial performance of carriers appeared to have improved in the third quarter but repeated its forecast for $11 billion in industry losses in 2009. ($1=NZ$1.40) (Additional reporting by Tim Hepher in Paris; Editing by Hans Peters) ((Wellington newsroom tel [phone], fax [phone], [e-mail])) Keywords: AIRNZ/ Keywords: AIRNZ/ (If you have a query or comment on this story, send an email to [e-mail]) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved.

The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.