Air New Zealand new widebody order: increased MTOW 787-9 for New York and 787-10s for Asia would be sensible

Air New Zealand (Air NZ) is closing in on an order for new widebody aircraft which will replace its fleet of eight Boeing 777-200ERs and potentially be used to launch new ultra long-haul routes.


Highlights:

  • Air New Zealand plans to announce a new order for widebody aircraft before the end of June;
  • The requirement focuses on replacements for eight 777-200ERs from late 2022 but includes possible growth aircraft capable of launching ultra long-range routes;
  • While Air New Zealand has included variants of the A350 in the campaign, a Boeing order is most likely given it already operates 777s and 787s.

Auckland-Chicago became Air NZ’s longest route on 30-Nov-2018, when the new three times weekly service was launched with 275-seat three class 787-9s. Chicago is Air NZ’s third new destination in the Americas in three years following Buenos Aires and Houston, which was Air NZ’s longest route prior to Chicago.

The westbound sector from Chicago to Auckland has a scheduled block time of 16hr20mins compared to 15hr10mins for Houston-Auckland and 13hr30min for Buenos Aires-Auckland. The eastbound sectors from Auckland for all three routes are significantly shorter due to tailwinds.

Air NZ has talked in recent years about launching even longer routes deeper into the Americas, particularly New York and Sao Paulo. However, the airline would need to acquire new aircraft as its current fleet does not quite have the required range.

In addition to its 275-seat 787-9s, Air NZ operates 302-seat 787-9s, 312-seat 777-200ERs and 342-seat 777-300ERs. All of Air NZ’s widebody aircraft are in three-class configuration featuring lie flat business class seats, premium economy and economy.

The 275-seat 787-9s are the latest addition to Air NZ’s fleet and have the longest range. Air NZ took its first 275-seat 787-9 in Oct-2017 and initially deployed the new sub-fleet to Houston, as The Blue Swan Daily previously analysed.

Air NZ now operates four 275-seat 787-9s and is slated take delivery of a fifth aircraft in the fiscal year starting 1-Jul-2019 (FY2020), according to its 1HFY2019 results presentation.

The four aircraft are currently deployed to Chicago, Hong Kong, Singapore and Sydney. Houston is currently being served with a mix of 777-200ERs and 777-300ERs; the route was initially launched in late 2015 with 777-200ERs but switched to 275-seat 787-9s after the two of this sub-type were delivered in late 2017.

Air NZ has been running a campaign for the last year to select a replacement for its eight 777-200ERs. The airline has been evaluating variants of the 787, A350 and 777X families. An RFI was sent to Airbus and Boeing in early 2018 followed by an RFP in mid 2018 with the aim of placing an order in early 2019 for deliveries starting in late 2022.

During its 1HFY2019 analyst briefing on 28-Feb-2019 Air NZ said it still plans to make a widebody aircraft decision and announce an order by the end of FY2019 (30-Jun-2019). The airline reiterated it aims to start taking delivery of new aircraft to replace its 777-200ER fleet in late calendar 2022 or 1HFY2023.

CHART – Air New Zealand’s group fleet plan for end FY2019 to end FY2022 indicates only the one additional widebody, a 787-9 in FY2020, and the 777-200ERs remaining in the fleet through FY2022Source: Air New Zealand (Note: *excludes 777-200ERs and 777-300ERs that are currently on short term leases to cover for 787-9s that are temporarily grounded due to engine issues)

While the main objective is to replace 777-200ERs, Air NZ is also looking at acquiring aircraft capable of operating new ultra long-haul routes (namely New York and Sao Paulo). This is not a necessity but clearly a desirable outcome.

Ordering additional 787s would make the most sense as the 777-8X is too big and the A350 would result in Air NZ adding a third widebody type – which should be avoided given Air NZ’s relatively small size and the number of new aircraft required. Air NZ may be including Airbus in the campaign to ensure a competitive bid from Boeing.

While its current 787-9 fleet is not able to make New York or Sao Paulo, Boeing is working on increasing the 787-9s maximum takeoff weight by around 10% or 2.5 tones. The higher MTOW variant should be available by 2022 and improve the feasibility of New York-Auckland and Sao Paulo-Auckland.

Air NZ may still have to opt for a slightly less dense configuration or accept payload limitations if maintaining 275 seats; while this would not be ideal the increased MTOW 787-9 may be close to make the two new routes worthwhile pursuing without the headache of introducing a new aircraft type.

Do not be surprised if it goes for a mix of increased MTOW 787-9s and 787-10s. The 787-10s has significantly less range but could be used on denser routes within Asia, offering slightly more capacity than the 312 seats now on the 777-200ER with unbeatable unit seat cost.