U.S. News

Air New Zealand to Buy More Boeing 777s, Holds Fuel Charge


National carrier Air New Zealand said on Friday it would buy four Boeing 777-300 aircraft to give it the ability to seek new international routes. It added that it would leave its fuel surcharge unchanged, in contrast to some competitors.

It did not disclose a price for the Boeings, but said the planes, which are more fuel efficient with a longer range and greater capacity, were being bought at a substantial discount to the list price of US$1.1 billion.

"We have the ability, when we introduce these aircraft, to access a new range of destinations from India to South America, and deep into China and North America," chief executive Rob Fyfe told a media briefing.

The purchase would be funded from a mixture of cash and debt.

Air NZ said it also had options to buy three more of the planes, which will be powered by General Electric engines . The airline already operates eight earlier model Boeing 777-200 planes on routes to Asia and North America.

It has been renewing its fleet to replace its older Boeing 747 and 767 planes, and has eight Boeing 787 long haul aircraft on order, due to start come in to service in 2011.

In January, Air NZ cut fares by up to 26%, banking on an increase in passengers to offset any impact on profit margins. Earlier this week it reported load factors in June were at 78.2%, up
7.5 percentage points on a year ago, driven by demand on its Australian and Pacific services.

Fyfe also said the airline would leave its fuel surcharge unchanged despite moves by several carriers, including Australia's Qantas, British Airways and Singapore Airlines, to raise them in response to higher fuel costs.

"At the moment there's nothing to herald a drop in fuel surcharges," he said, adding he hoped the company would not have to raise the surcharge. "But I struggle to figure out what the fuel price is going to do in three months time, it's so volatile."

Aviation fuel prices have hit almost US$90 a barrel in recent weeks.

Air NZ shares, 77% owned by the New Zealand government, last traded down 2.3% or six cents at NZ$2.60, having traded between NZ$1.08 and NZ$3.13 over the past year.