First 747-400 heads for wrecker

JOHN SELKIRK

DEAL: Australian airline Virgin Blue's capital-raising quandary has reignited speculation across the ditch of a tie-up between Sir Richard Branson's airline and Air New Zealand.

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Air New Zealand's first Boeing 747-400 will soon make one final flight to a wrecker's yard as further capacity cuts loom in the face of a continued fall in demand for global air travel.

The 19-year-old jumbo, named The Bay of Islands, was grounded and put up for sale after completing Air New Zealand's historic biofuel test flight in December.

Air New Zealand head of long-haul airline Ed Sims said negotiations were under way with two potential buyers who would probably dismantle the aircraft overseas.

A sale was expected to be concluded within the next few weeks.

Air New Zealand has slashed capacity to match the dramatic slowdown in global air traffic and further cuts are expected.

"The pending sale of the aircraft is a reflection of the current situation where we are seeing long-haul demand down 10 to 15 per cent," Mr Sims said.

Overall, capacity would be down about 9 per cent for the year.

Airlines around the world were grounding aircraft to minimise losses, Mr Sims said.

"We cannot rule out further aircraft being grounded with the global economy in its current state," he said.

Global passenger numbers fell another 3.1 per cent in April on a year earlier, the latest figures from the International Air Transport Association show.

While this was an improvement from the 11 per cent dive in March, the April figures were skewed by the timing of Easter and early indications were for another double digit decline for May in some markets, IATA said.

The grounded 747 was delivered to Air New Zealand from the Boeing factory near Seattle on December 16, 1989 and was immediately leased to Cathay Pacific for about a year.

It was the first of an eventual fleet of eight that replaced the earlier model 747-200.

Chief financial officer Rob McDonald said in February that the prospects of selling the plane were not huge in a market where more than 1000 aircraft had been parked due to the global economic crisis. That number is expected to double by the end of this year.

The aircraft had a book value of about $5 million, just a fraction of the US$250m (NZ$410m) list price for a new 747-400.

The Air New Zealand livery, including the Koru on the tail has been painted over and the 379 seats would be removed.

A dismantling company will recover and refurbish most of the aircraft's electronic and mechanical components for resale, including cockpit instruments, weather radar and hydraulic actuators that move the control surfaces on the wings and tail. Most of the body, made of various metals and plastics, would be recycled.

Air New Zealand will replace the 747 fleet with five Boeing 777-300ER long-haul jets from late next year.

PLANE FACTS: During its 19-year career Air New Zealand's first Boeing 747-400 registration ZK-NBS:Carried 3.6 million passengers on 11,490 flights. Has flown 88,300 hours, spending more than half its life airborne. Travelled 80 million kilometres, the equivalent of about 2000 return trips from Auckland to London.