Air New Zealand will deploy excess cash towards paying for its future deliveries of its Airbus A320 and A321neos, with the latter type set to provide additional capacity on its domestic network.

During its investor day event, chief financial officer Jeff McDowall reiterated that the carrier is targeting to reduce its cash balance from around NZ$1.3 billion ($915 million) to between NZ$800 million and NZ$1 billion.

“The primary way by which we will be doing that is by paying cash for the owned A320/A321neo aircraft as they come into the fleet,” he says.

McDowell adds that this will give the airline a larger base of unencumbered assets that could be used to raise financing if it were required in future.

That will see its capital expenditure over the next three years grow from NZ$350 million to NZ$450 million, although that includes pre-delivery payments on a widebody order expected next year to replace its eight Boeing 777-200ERs.

Flight Fleets Analyzer shows that the carrier will take delivery of three A320neos and one A321neo from Air Lease between December 2018 and April 2019.

The first A320neo from its own orderbook is scheduled for delivery in July 2019, which will be followed by 12 other A320/A231neo deliveries that stretch out to April 2021.

Air NZ’s A320neo family jets will all be powered by Pratt & Whitney PG1000G engines. The first few aircraft will be used to replace A320ceos used on its short-haul international services to Australia and the Pacific Islands.

McDowall says that will free up three leased A320ceos to join its domestic fleet of 17 A320s. As those three leases expire, the airline will replace them with larger A321s to accommodate expected demand growth.

Further upgauging could occur in 2022 and 2024 when more of the domestic A320s come off lease.

“At those points we will have opportunity to replace those aircraft with larger A321,” he adds.

Source: Cirium Dashboard