Change for Night Time Flyers

Freightways announces aircraft fleet upgrade

Freightways announces that it will transition from its current fleet of Convair freighter aircraft to Boeing 737-400 freighter aircraft between February and May 2016. The benefits for Freightways of this new airfreight service include: 

• Increased airfreight carrying capacity 
• Faster sector speeds 
• Savings in annual capital and operating costs 
• Modern navigational systems 
• Reduced carbon emissions per item of freight carried 

Key points relating to this initiative are: 

• Freightways' subsidiary, Fieldair Holdings Limited, will form a Joint Venture company with Airwork Holdings Limited that will operate three Boeing 737-400 freighter aircraft to replace the airfreight service currently performed by Fieldair’s subsidiary, Air Freight NZ Limited, which uses five Convair freighter aircraft. 
• Airwork will lease the three 737-400 freighter aircraft to the joint enture company. 
• The joint venture company will operate the aircraft. 
• Customers of the joint venture company will be Freightways' express package businesses and NZ Post’s Express Couriers Limited business. If demand warrants it, capacity will be made available to other freight operators. 
• The 737-400 freighter aircraft will provide sufficient capacity to accommodate the expected future growth of Freightways’ express package volumes. 
• Freightways' existing Convair fleet will be made available for sale upon the transition to the 737-400 freighter aircraft. 
• The carrying value of Freightways’ Convair fleet and related spare parts has been written down by $7.6 million to reflect the realisable US dollar (USD) value of the fleet and parts at the current USD foreign exchange rate. The carrying value of the Convair fleet had previously been based on the exchange rate applicable at the time the last Convair was purchased in 2003 and supported by the fleet’s value in use to Freightways. The decision to transition from and sell the Convair fleet triggered the need to assess realisable values for accounting purposes and to reflect those values at the prevailing exchange rate. As a non-recurring and non-cash expense this write-down in value will not impact on Freightways' dividend payments to its shareholders. 
• To transition to the new airfreight service, including redelivery of a currently-leased aircraft, capital expenditure of $1.7 million and transition costs of $1.35 million will be incurred. 
• The financial benefit to Freightways is primarily related to cash savings in capital expenditure of approximately $3 million per annum and incremental savings in annual operating costs.

Background 

Freightways' express package businesses provide an overnight, inter-island airfreight service to their customers. To enable this service, Freightways operates its own dedicated airfreight service from airport/road hubs at Auckland, Palmerston North and Christchurch. Freightways' aircraft fleet consists of 4 owned Convair CV580 aircraft and 1 leased Convair CV5800 aircraft. The Convair fleet has provided a good and reliable service since its introduction into New Zealand in 1989.

As express package volumes have grown, demand for the earlier positioning of airfreight through the airport hubs has increased. In order to sustain the levels of service required by its customers, Freightways has for some time been exploring alternative aircraft options. The 737-400 aircraft are deemed by Freightways to be the most suitable alternative aircraft to the current Convair fleet. The 737-400 aircraft operate with a net payload of approximately 17,000kg compared to a typical Convair CV580 net payload of 6,500kg. The 737-400’s will provide sufficient capacity for the future expected growth of the overnight airfreight market in New Zealand for many years to come. The 737-400’s are fitted with modern avionics equipment that is compliant with Airways Corporation requirements for navigation equipment used throughout New Zealand and will be for the foreseeable future. Additionally, carbon emissions per item of freight carried compared to the current use of the Convair fleet are expected to reduce.

Fieldair Holdings has operated in New Zealand’s general aviation and engineering maintenance market since 1951 and since 1989 as an airfreight operator for Freightways. Fieldair will continue to service its other maintenance and flight operations customers from its bases in Palmerston North, Auckland, Christchurch and Wellington, while also participating in the joint venture company.

Airwork is an experienced operator of Boeing 737 aircraft and has recently purchased a number of 737-400 passenger aircraft that will be converted to freighters in the United States. A joint venture that matches Fieldair’s and Airwork’s respective aviation expertise pragmatically aligns the capability of each business.

Conclusion

This new airfreight service will deliver positive service and financial benefits to Freightway’s stakeholders.

New Air-Freight Network Set to Deliver for Airwork

A new combined airfreight network created by NZ Post subsidiary Express Couriers Limited (ECL) and Freightways will utilise three Airwork-owned Boeing 737-400F aircraft. The aircraft, which will travel between Auckland, Palmerston North and Christchurch, will be leased to a new entity operated jointly by Airwork and Freightways subsidiary Fieldair.

Airwork will enter into a long-term (10 year) contract with the Joint Venture, which will ensure Airwork remains a key player in the new ECL-Freightways network. 

Airwork has successfully operated the ECL and New Zealand Post aircraft for more than 20 years and brings extensive experience and capability in operating and maintaining Boeing 737s to the new Joint Venture.

Airwork CEO Chris Hart says the new agreement will help to future proof the express freight network in New Zealand while ensuring its major customers avoided an otherwise significant cost increase. 

Airwork earlier this month announced it had extended its contract with Toll Holdings’ Australian airfreight express business to 2022 and would be replacing at least two of its 737-300Fs on that contract with 737-400Fs, the first two aircraft to be replaced before February 2016. 

Hart says Airwork remains on course to record net profit after tax of $15.3 million for the year ending 30 June 2015.

And this from www.stuff.co.nz indicating the departure of the Friendships. One wonders what will happen with the Metros?

The rapid growth in online shopping has prompted express delivery company Freightways and New Zealand Post to upgrade their fleets of propeller freighter aircraft to Boeing 737-400 jets. New Zealand Post and Freightways' subsidiary Fieldair will lease the the 737-400s from Airwork which would also operate the aircraft. The 737s will replace Fieldair's existing fleet of ageing five Convair CV580 turboprop freighters as well as New Zealand Post's 737-300 and two Fokker F27 Friendships. The 737 passengers planes will be converted to freighters in the United States and will be progressively pressed into service by May next year. The bigger 737 will carry a payload of 17 tonnes compared to a typical Convair's 6.5 tonne capacity. The aircraft will fly between Auckland, Palmerston North and Christchurch.