Air New Zealand is to buy 14 new Airbus A320 aircraft, to replace its current domestic jet fleet of 15 Boeing 737-300 aircraft.
At list prices, the cost of the 14 aircraft would be more than $US1 billion ($A1.1 billion), but Air New Zealand said it had secured the aircraft at a discount that reflected market conditions.
As part of the agreement, the airline also secured purchase rights for a further 11 aircraft.
"Subject to final contract, the first A320 aircraft will arrive in January 2011, with the fleet to be progressively introduced through until 2016 coinciding with the expiry of 737 aircraft leases," Air NZ group general manager short haul airline Bruce Parton said.
The aircraft would be powered by an advanced version of the IAE V2500 engines currently fitted on the A320, allowing further fuel burn improvement.
The engines would be serviced at the joint venture Air New Zealand-Pratt and Whitney Christchurch Engine Centre, providing ongoing work for the 400 staff employed there, Air New Zealand said.
Air New Zealand said it had been evaluating options to replace the 737-300s for the past eight months.
"This is a very good time to buy aircraft. The industry is at the bottom of a deep cycle so demand for aircraft is limited, creating favourable conditions for buyers with strong balance sheets like Air New Zealand," Mr Parton said.
"This is a very exciting time for Air New Zealand when you consider we will be introducing 777-300s, 787-9s and now also A320s into our fleet during the first half of the next decade.
"It will ensure the airline continues to have one of the youngest fleets in the world, and a world-beating product across the entire jet fleet," Mr Parton said.
Air New Zealand's existing fleet of 12 A320 aircraft was performing well on the airline's short haul international network. Moving to one single-aisle jet aircraft type across both domestic and short haul networks would deliver efficiencies in fuel burn, maintenance, training, spares holding and fleet management.
"Thanks to its fuel efficiency, the A320 will enable Air New Zealand to increase capacity on the domestic market while reducing carbon emissions," Mr Parton said.
The larger aircraft would enable increased capacity on routes that were beginning to face capacity constraints at some airports during peak times.
The current 737 fleet had 133 seats, with the larger domestic A320 aircraft likely to have around 171 seats.
Domestic and short haul international fleets would have different configurations.
© 2009 AAP
