Air New Zealand announces purchase of 15 new aircraft as regional competition hots up

Air New Zealand [NZX: AIR] is buying 15 new ATR72-600 aircraft worth a total $US375 million as regional competition heats up.

Chief executive Christopher Luxon announced the new aircraft at a press conference in Auckland, attended by Prime Minister John Key.

Eleven of the new aircraft will replace the airline's ageing 72-500 fleet while the remaining four will allow for growth on regional routes on which Air New Zealand is facing fresh competition from Qantas offshoot, Jetstar.

Air New Zealand has said the extra seating capacity on the new aircraft means it will be able to be more competitive on price fares this year and passengers can expect to see over two million fares under $100 this financial year.

Three years ago Air New Zealand said it would invest in 14 of the 72-600 aircraft, of which seven have since been delivered and the remaining seven will arrive by the middle of next year. The 15 additional aircraft are due to arrive at the end of next year.

Mr Luxon said the airline was committed to operating a world-leading turboprop fleet and a comprehensive regional network.

"The extra four 68-seat ATR72-600 that we are adding to our fleet will enable us to operate up to an additional 600,000 seats into the New Zealand regional market annually," Luxon said.

Once the new aircraft arrive, the airline will have a fleet of 29 ATR aircraft, the third largest in the world, to service the regional network. In addition, Air New Zealand also operates 10 19-seat Beech 1900D and 23 50-seat Bombardier Q300 aircraft.

At the company's annual meeting last month, Mr Luxon said the airline is spending $2.6 billion in the next four years on new aircraft, including a further seven Dreamliners.

Overall fleet capacity will increase 11% this year compared to 12% last year, which Mr Luxon said was the fastest it had grown in the airline's 75-year history.

The country's national carrier also said increased demand due to buoyant tourism and lower fuel prices had strengthened its outlook for the first half of the 2016 financial year with a forecast $400 million profit before tax compared to $216 million in the previous corresponding period.

(BusinessDesk)