Air NZ selects new engines for Airbus purchase

By NZPA

Tuesday 10th December 2002

Problem-plagued Air New Zealand today unveiled its choice of engine for its pre-planned purchase of up to 35 new Airbus aircraft, which are due to start arriving next year.

The airline said it had selected International Aero Engines' (IAE) V2500 engine.

An overhaul and repair contract has also been given to the Christchurch Engine Centre, a joint venture between Air NZ and Pratt & Whitney.

The contract is worth $50 million over the next 10 years, and is expected to create at least 100 new jobs.

Air NZ spokeswoman Rosie Paul said she could not confirm whether General Electric engines had been in the running for the engine purchase.

It was a GE engine that malfunctioned on an Air NZ flight from Brisbane on Sunday, prompting an emergency landing.

But she stressed the Christchurch Engine Centre, which is 90 percent owned by Pratt & Whitney, was not connected to Air NZ's own engineering service.

Air New Zealand announced in July it was buying 15 new Airbus A320 planes, with purchase rights on another 20 over the next 10 years.

The first of the new planes is due in October 2003, and the 15th plane should be delivered by the end of 2006.

They will replace four Boeing 767-200s and nine Boeing 737-300s used to fly the Tasman and to Pacific Island destinations.

The cost of the new engines was not clear today, but Air NZ has a capital investment budget of more than $US400 million ($NZ827 million) which covers both the new planes and engines.

Air NZ said the Airbuses would more than repay the initial outlay by carrying more passengers and creating lower operating costs.

At first the purchase was seen as a strong stand of independence by Air NZ in the face of competition from Qantas. But analysts also pointed out that since Qantas was also buying Airbuses, any alliance would involve compatible aircraft.

One analyst noted at the time that Air NZ was buying the new aircraft at bargain basement prices after the September 11 attacks.

"The options on the aircraft are important because they lock in the purchase price at current depressed prices, and will enable Air NZ to replace its entire Tasman and short-haul fleet over the next 10 years," he told NZPA.

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