VZCZCXRO0843
RR RUEHAG RUEHCHI RUEHDF RUEHFK RUEHHM RUEHIK RUEHKSO RUEHLZ RUEHNAG
RUEHPB RUEHRN RUEHROV RUEHSR
DE RUEHWL #0037/01 0440312
ZNR UUUUU ZZH
R 130312Z FEB 09
FM AMEMBASSY WELLINGTON
TO RUEHC/SECSTATE WASHDC 5681
INFO RUEHNZ/AMCONSUL AUCKLAND 1849
RUEHBY/AMEMBASSY CANBERRA 5384
RUEHDN/AMCONSUL SYDNEY 0797
RHHMUNA/CDR USPACOM HONOLULU HI
RUEHZU/ASIAN PACIFIC ECONOMIC COOPERATION
RUEHSS/OECD POSTS COLLECTIVE
RUCPDOC/USDOC WASHDC 0277
RUEATRS/DEPT OF TREASURY WASHDC
RUEHRC/DEPT OF AGRICULTURE WASHDC
RUCNMEM/EU MEMBER STATES COLLECTIVE

UNCLAS SECTION 01 OF 02 WELLINGTON 000037 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP/ANP AND EEB, STATE PASS TO USTR, PACOM FOR 
J01E/J2/J233/J5/SJFHQ 
 
E.O. 12958: N/A 
TAGS: BEXP EAIR EIND EINT EINV ENRG ETRD NZ
SUBJECT: BOEING BIDS TO SELL AIR NEW ZEALAND FIFTEEN NEW AIRCRAFT 
 
Ref: Wellington 02 
 
WELLINGTON 00000037  001.2 OF 002 
 
 
¶1. (U)  Summary:  Boeing Corporation hopes to secure a new tender 
for the sale of fifteen new 737s to Air New Zealand worth US$1.2 
billion.  If successful this will add to Boeing's already lucrative 
contract to supply the national carrier with state-of-the-art 
aircraft.  Air New Zealand is awaiting delivery of eight 787 
Dreamliners worth US$1.5 billion and four 777-300ERs worth an 
additional $US1 billion.  To date, Boeing has been able to win out 
against rival Airbus in the New Zealand market because of its 
technological edge.  While the new National government is not likely 
to place an order for additional military aircraft, the government 
is eager to work with Boeing to introduce biofuels in aircraft in 
order to reduce the country's carbon footprint.  End Summary. 
 
Boeing competes with Airbus for Billion Dollar Deal 
--------------------------------------------- ------ 
 
¶2. (SBU)  Craig Saddler, President of Boeing's Australia and South 
Pacific Office, met with Embassy staff and announced that his 
company would be entering a new round of tendering in March 2009 to 
secure a potentially lucrative contract worth US$1.2 billion to 
supply Air New Zealand with fifteen new aircraft.  Boeing is hoping 
to sell fifteen 737s to enhance the Air New Zealand's commercial 
fleet.  The principle competition in this tender comes from Airbus, 
which hopes to sell its alternative model A320s in the hope of 
gaining greater market share. 
 
¶3. (U)  Air New Zealand currently has on order eight Boeing 787-9 
Dreamliners worth approximately US$1.5 billion.  Air New Zealand was 
the second airline company to order the advanced 787 model, placing 
its initial order for two airplanes in 2004.  The new aircraft are 
important to Air New Zealand's growth plans over the next decade to 
extend their long-haul capabilities to a variety of destinations in 
Africa, India, the Americas and Asia.  Despite production setbacks 
due to strikes at Boeing's American plants last year, Boeing hopes 
to deliver the first aircraft by the end of 2010, with full delivery 
by 2013.  Given the current financial picture, Air New Zealand told 
Saddler that the delay in delivery was not an issue.  Air New 
Zealand also has four 777-300ER aircraft on order from Boeing worth 
an additional US$1 billion which are scheduled for delivery in 2010 
and 2011. 
 
Boeing's Comparative Advantage 
------------------------------ 
 
4 (SBU)  The technologically advanced 787 is an entirely new 
airplane incorporating composite technologies (carbon fiber) and new 
engines that contribute to operating fuel and environmental 
efficiencies and performance characteristics exceeding conventional 
airframes.  Saddler claimed that Boeing's technological advantage 
cannot be easily matched by Airbus, resulting in a growth in the 
company's orders for new aircraft now approaching 1,000 
internationally (versus 300 Airbus order, per Saddler).  Saddler 
said that Airbus has tried to reproduce the advanced composite 
structure but has only been able to produce panels and cannot match 
the single fuselage design. 
 
Boeing Looks for Opportunities with New Government 
--------------------------------------------- ----- 
 
¶5. (SBU)  Saddler has been making the rounds in Wellington this week 
to introduce himself to members of the new National government.  He 
met with the Cabinet Ministers for Defence, Environment and 
Transport.  In his discussions with Defence Minister Wayne Mapp, he 
said there was interest in exploring the possibility of the agency 
using more modified 757 aircraft.  Currently the New Zealand Air 
Force operates 2 Boeing 757s but both had been out-of -service last 
year while in the U.S. Boeing plant for a US$100 million 
retrofit/upgrade.  (Note: the lack of the 757s became an issue when 
the Air Force had to send a Hercules aircraft to Bangkok in December 
rather that the more appropriate 757s to Bangkok to retrieve 
stranded Kiwis travelers during the airport strike.  End Note.) 
Saddler thinks it unlikely that the Defence Ministry will be making 
any additional purchases for new military aircraft and will continue 
to rely on the older P3s for the foreseeable future. 
 
6 (SBU)  Saddler also said that in his meeting with Environment 
Minister Nick Smith, he had an opportunity to discuss the first 
 
WELLINGTON 00000037  002.2 OF 002 
 
 
successful test flight using biofuel by Air New Zealand in a Boeing 
aircraft in December 2008 (see Reftel).  Saddler stated that his 
company is committed to expanding the use of a biofuel mixture to 
improve the carbon footprint of the industry.  He predicted that 
within five years, approximately 10 percent of the Air New Zealand 
fleet will be operating on a biofuel mixture produced from jatropha 
- an inedible plant. 
 
¶7. (SBU)  In contrasting his meeting with the National government, 
Saddler recounted a meeting he once had in Sydney with former Labour 
Prime Minister Helen Clark who asked him to consider building a 
Boeing plant in New Zealand.  He said that the PM had to be reminded 
that without the possibility of the GNZ purchasing any Boeing 
planes, it was unlikely there was a profit incentive to expand 
operations in New Zealand. 
 
KEEGAN