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The overall increase of world market raw material prices, particularly metals, will not affect the price of several new aircraft that Air Pacific is buying from Boeing.
Air Pacific’s managing director and chief executive officer John Campbell says that under the terms of their contract with Boeing, Air Pacific has negotiated limits on price escalation on materials and labour that inevitably arise between the original contract date and aircraft delivery.
“We are therefore contractually protected from some of the major movements in raw material input to the aircraft,” he said.
“The contracted costs have been factored into our business case.”
Campbell was answering questions regarding recent price increases mainly triggered by the weak US currency and the overall increase of world market’s raw material prices – especially with regards to metal that could see a general price increase for aircraft.
News reports said prices for metal-products (aluminium plates, stainless steel etcetera) have gone up by at least 6.5 per cent and costs for industrial products in the euro-area increased by 5 per cent in the course of 2007.
Titanium, steel, aluminium, aluminium-lithium account for at least 40 per cent of materials in modern aircraft design.
Air Pacific is planning to spend almost $1 billion to buy three B787-9 Dreamliners, powered by GE GEnX engines, for delivery in 2016 and 2017.
These are in addition to the five B787-9 Dreamliners purchased by Air Pacific for delivery in 2011 and 2012.
The aircraft have a list price of FJ$927 million (US$580m). This brings the total fleet order to F$2.4 billion, the largest transaction ever undertaken by a Fiji company.
Last week, media reports quoted Air Pacific as saying that it was facing 15-20 month delay in getting its new Boeing 787 Dreamliners.
Campbell was quoted as saying said the Fiji carrier was in talks about extending leases on its Boeing 747 and 767 wide-body airliners to ensure adequate capacity.
Boeing earlier announced that there would be delays in deliveries of its new airliner because of manufacturing and certification issues.
