Air New Zealand orders eight Boeing 787 jets for long-haul flights

(Reuters) - Air New Zealand Ltd said on Monday it has ordered eight Boeing Co 787-10 Dreamliner jets worth $2.7 billion at list prices, which will be powered by General Electric engines.

The announcement confirmed a Reuters report last week that Boeing had beaten out rival Airbus SE, which had proposed the A350 for the hotly contested deal.

The airline, which has Rolls-Royce Holdings PLC engines that have proven problematic on its existing fleet of 13 787s, announced it had switched to GE engines for the new order.

The 787s will replace eight older 777-200ERs and leave the carrier with an all-Boeing wide-body fleet as well as Airbus A320 family jets for shorter flights.

The order comprises eight long-range 787-10s, with the agreement including an option to increase the number of aircraft to 20.

The deal also gives the airline, which has previously mentioned a goal of flying Auckland-New York non-stop, the option to switch some aircraft to the longer range 787-9s.

“With the 787-10 offering almost 15 percent more space for customers and cargo than the 787-9, this investment creates the platform for our future strategic direction and opens up new opportunities to grow,” Air New Zealand Chief Executive Christopher Luxon said in a statement.

The eight jets will enter the Air New Zealand fleet between 2022 and 2027, the airline said.

“The 787-10 has 95 percent commonality with Air New Zealand’s existing fleet of 787-9s and will provide the airline with added benefits in terms of capacity and overall operations,” Vice President of Boeing Commercial Sales and Marketing for Asia Pacific Christy Reese said.

Boeing said the 787-10 is the largest member of its Dreamliner model, and can serve up to 330 passengers in a standard two-class configuration, about 40 more than the 787-9 airplane.

“With the 777 and now the 787-9 and 787-10, Air New Zealand will have an incredible widebody family to serve its passengers and grow its international network in the years ahead,” Ihssane Mounir, Boeing’s senior vice president of Commercial Sales and Marketing said in a statement.

Air New Zealand in March launched a two-year cost reduction program and said it would defer spending on aircraft by about NZ$750 million ($491 million) as part of a business review.

The airline said the 787 was 25 percent more fuel efficient than the jets it is replacing, and noted that carriers typically receive large discounts on the list price of jets.

In February, Air New Zealand slashed domestic fares by as much as 50 percent in a shake-up of its pricing structure in response to the slackening travel market.

($1 = 1.5265 New Zealand dollars)

Reporting by Aditya Soni in Bengaluru and Jamie Freed in Singapore; editing by Susan Thomas and Richard Pullin