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Air New Zealand second airline to order new jet

By Seattle Times staff and wire services

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New Zealand's largest carrier ordered two 7E7s and eight 777-200ERs as part of an $849 million deal to upgrade and expand its long-haul fleet.

Air New Zealand also secured 42 options to buy Boeing wide-bodies. It did not provide details, but the options will cover all Boeing 777 models and 7E7s.

The transaction requires shareholder approval under New Zealand stock-exchange rules.

"The new fleet will provide Air New Zealand with lower operating costs and improved financial performance over and above that which could be achieved by expanding the existing fleet of 10 767s," said Ralph Norris, Air New Zealand's managing director and chief executive.

The deal was a welcome win for Boeing over European rival Airbus, which had been trying to sway Air New Zealand to buy Airbus A330 wide-bodied jets to replace 10 aging Boeing 767s.

Two years ago, Air New Zealand selected Airbus A320s over Boeing 737s to upgrade its short-haul fleet.

Air New Zealand will begin taking delivery of the 777s in September 2005, with the balance to be received by the end of 2006. Delivery dates for the two 7E7s have not been determined.

Air New Zealand selected Rolls Royce engines to power its 7E7s, making it the first airline to select a 7E7 engine maker. All Nippon Airways hasn't decided whether it will use Rolls Royce or General Electric engines on the 50 7E7s it ordered in April.

The carrier is upgrading services and slashing costs as it prepares to counter increased rivalry on its routes from Qantas Airways, Emirates and Singapore Airlines.

Norris is trying to restore earnings after the company was rescued from a collapse by the government in 2002.
 
The company will pay cash for some of the additional aircraft and borrow to pay for others, Norris said. The company also will proceed with a sale of shares to existing shareholders, he said.

Information from Seattle Times aerospace reporter David Bowermaster is included in this report.

Boeing settles with FAA over rules violations

WASHINGTON — Boeing agreed to pay $824,800 for quality-assurance problems in producing 737, 747, 767 and 777 planes, the Federal Aviation Administration (FAA) said yesterday.

The Boeing settlement stemmed from investigations from October 1998 to April 2002 that found some production processes didn't comply with the company's quality-assurance program, the FAA said. None of the procedural issues resulted in safety problems with the planes, said Boeing spokeswoman Cindy Wall.

The FAA found, for instance, that some workers didn't say in paperwork they had completed certain tasks, Wall said.

Boeing has fixed those processes and "since then our production system has been more efficient," Wall said.

— Bloomberg News