Air New Zealand's multimillion-dollar silver lining
Air New Zealand couldn't resist a little gloating when announcing the commitment to buy and lease 14 Airbus A320s to replace its Boeing aircraft on domestic routes.
Although it is not releasing details of the deal, the airline said it had got $1.4 billion worth of aircraft at bargain prices, buying at the bottom of the cycle for airlines and plane makers.
UBS analyst Jason Bloom is picking Air New Zealand got a discount of between 40 and 50 per cent on each plane it is buying. Off the peg, they sell for just on $100 million, including cabin fitout.
"You can make significant amounts of money if you negotiate at the right time, which they've done."
The three-year delay for the long-haul Boeing 787 Dreamliner also played into the airline's hands, Bloom says, allowing it to play Airbus off against its rival which is in a slightly weakened position.
The deal will see capex take off at Air New Zealand which has new Boeing 777-300s arriving next year. The airline expects capex to rise from $200 million this year to more than $600 million by 2012, and those figures exclude the A320s.
Bloom says they will add around another $50 million a year. Other carriers who committed to the A380 super jumbo have been spending heavily. "Air New Zealand has essentially had that [capex] holiday - they've been quite fortunate with the timing of the financial crisis."