Air New Zealand will add eight new Boeing 787-10 aircraft to its fleet, which make it possible for the carrier to fly non-stop from New Zealand to New York while trying to attract more high-end tourists to the country.
The airline’s chief executive, Christopher Luxon, said the new aircraft order was a "hugely important decision” for the carrier, with the first of the jets to arrive in late 2022.
Air New Zealand has ordered eight new Boeing 787-10 Dreamliners, which will be able to fly from Auckland to New York non-stop. Credit: AP
The new aircraft, which will replace eight aging 777-200s, have a list value of $US2.7 billion ($3.9 billion), but airlines usually negotiate significant discounts and the final price tag is confidential.
The 787-10 Dreamliners have about 15 per cent more space for passengers and cargo than Air New Zealand's 13 existing 787-9s, which can carry 302 people, and will operate on its long-haul routes around the Pacific Rim including to Australia, Asia, South American and the US.
Announcing the order in Auckland on Monday, Mr Luxon said Air New Zealand would look at reconfiguring all its Dreamliners in 2022 with a view to include more premium and business seats.
Carrying fewer passengers would mean the jet could carry more fuel, allowing them to fly non-stop flight from New Zealand to New York if there was demand for that route, Mr Luxon said.
Qantas uses a 787-9 to fly non-stop from Perth to London non-stop, but is looking at the larger Boeing 777X and Airbus A350 for non-stop flights to London and New York from Australia’s east coast from 2022.
Mr Luxon said gearing its planes towards premium seats aligns with both the airline and the New Zealand government's strategies to attract wealthier tourists to the country.
“We are all quite united in this drive for value over volume", Mr Luxon said.
"We don’t want the joint turning into Cancun or Bali - we need it to turn into Switzerland."
Air New Zealand has seen a slowing inbound tourism market as the global economy cools, and has revised down its expectations for growth over the next three years from between 5 and 7 per cent to between 3 and 5 per cent.
The order sees Boeing emerge over victorious over rival plane maker Airbus, which had pitched its A350 to Air New Zealand in a fierce two-year contest for the contract.
Air New Zealand chief executive Christopher Luxon.Credit: Christopher Pearce
The order will be a welcome boost for Boeing, which has seen its market capitalisation drop by around $60 billion in the wake of two fatal crashes involving its 737 Max planes, which remain grounded worldwide.
Mr Luxon said those crashes, and questions they have raised about Boeing's safety standards and corporate culture, did not concern him "at all".
"Boeing is a company that we’ve known for over 50 years," he said. "We’re very comfortable."
Technical problems with the Rolls-Royce Trent1000 engines in Air New Zealand's existing Dreamliners have forced it to lease two Boeing 777-200s to supplement its fleet while aircraft are grounded for repairs.
In a move that will be seen as significant in the industry globally, the airline has dropped Rolls-Royce for its new order and opted for rival engine maker General Electric’s GEnx-1B engine.
The order with Boeing includes options for another 12 of the wide-body aircraft if Air New Zealand decides it needs them, and it can also swap the 787-10s for 787-9s.
Air New Zealand is dual-listed on the Australian and New Zealand stock exchanges, with the New Zealand government owning 52 per cent of its shares.
The company's share price is down about 30 per cent since late January, after the company revised down its full-year profit forecast by $NZ100 million ($94.5 million), to between $NZ340 million and $NZ400 million, on softer international and domestic bookings and the Dreamliner groundings.
The delivery schedule for the new planes is spread out from 2022 to 2027, rather than to 2025 as originally expected, which Mr Luxon said allowed a more conservative capital management and flexibility if the market does weaken further.
The reporter travelled to Auckland as a guest of Air New Zealand.