(Reuters) - Air New Zealand Ltd said on Monday it had ordered eight Boeing (NYSE:BA) Co 787 jets worth $2.7 billion at list prices, allowing it to open up longer non-stop routes, such as Auckland-New York.
The announcement confirmed a Reuters report last week that Boeing had beaten rival Airbus SE, which had proposed the A350 for the hotly contested deal.
The airline, which has Rolls-Royce (LON:RR) 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 from to 20. The deal also gives the airline the choice to shift from the larger 787-10 aircraft to smaller 787-9s, or a combination of the two.
"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.
Air New Zealand in March launched a two-year cost reduction programme 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 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)