Airfreight JV caters for online shopping

NZ Post is transitioning away from traditional mail delivery as demand for overnight mail delivery increases
NZ Post is transitioning away from traditional mail delivery as demand for overnight mail delivery increases

Freightways, the courier and information management company, and aviation services firm Airwork Holdings, have launched an airfreight network to replace Freightways’ existing unit, and will count
New Zealand Post’s Express Couriers as a cornerstone customer.

Freightways’ courier business and Express Couriers will use Airwork’s three Boeing 737-400F aircraft to travel between Auckland, Palmerston North and Christchurch, which will be leased to a new entity operated by the joint venture company. The venture replaces the service provided by Freightways’ Air Freight NZ subsidiary, which operates five Convair aircraft, and the planes will be put up for sale.

The rapid growth in online shopping is the cause for the enhanced fleets of propeller freighter aircraft to Boeing 737-400 jets.

Courier services account for about three quarters of Freightways’ annual revenue and have become an increasingly important part of NZ Post’s business, which is transitioning away from traditional mail delivery.

The joint venture’s initial customers will be Freightways’ express package business and NZ Post’s Express Couriers, but is open to other freight operators if there’s demand for the business, Freightways said. The Air Freight NZ subsidiary will continue to service other maintenance and flight operations customers.

NZ Post said the joint venture will reduce the state-owned enterprise’s operational costs and give it security of service for the next decade.

Freightways wrote off $7.6 million of carrying value from the Convair fleet, and will incur $1.7 million in capital expenditure and transition costs of $1.35 million to switch to the new air freight venture. It will transition from its current fleet between February and May of next year.

The courier and information management company anticipates annual cash savings of $3 million from the venture, which will boost carry capacity, increase sector speeds, and reduce carbon emissions per item of freight carried.

Airwork entered into a 10-year contract with the joint venture, extending a long-running relationship with NZ Post and adding Freightways. The company affirmed earnings guidance of $15.3 million for the year ending June 30, and chairman Mike Daniel said the company “would expect to see improvement in our returns form the network” from the larger volume of work.

Earlier this month the company extended its contract with Toll Holdings’ airfreight express business until 2022, and will replace two aircraft as a result.

Freightways shares increased 0.5 per cent to $5.93, and have edged up 1.7 per cent this year, while Airwork shares last traded at $3.15, and are unchanged from the start of the year.

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