Mammoth Freighters LLC, backed by funds managed by Fortress Investment Group, on Thursday publicly launched a business that will convert used 777s into all-cargo planes that can carry heavy containers on the main deck instead of passenger seats.
Accelerating growth in air cargo shipments has sparked greater interest from investors and operators in revamping large Boeing 777 passenger planes into freighters. Mammoth officials say the reconfigured aircraft will add capacity for cargo shippers and also serve as replacements for aging 747-400 and MD-11 freighters.
A flexible business model will allow air cargo operators, express carriers and leasing companies to provide their own assets for conversion or pick up a ready-to-fly converted freighter from Mammoth’s existing inventory. Mammoth has 10 777-200LR aircraft it acquired from Delta Air Lines (NYSE: DAL), which retired its 777 fleet last year.
Mammoth’s investment is driven by an abundance of widebody aircraft that airlines are abandoning for smaller, more fuel-efficient models more suited to the diminished scale of air travel since COVID and people’s desire for direct service that doesn’t involve hub connections.
“The availability of a substantial amount of 777-200 and -300 feedstock really set this opportunity into motion,” said Brian McCarthy, vice president of marketing and sales, in an interview.
The two planes are very similar, with the biggest difference being the fuselage of the -300 is about 33 feet longer.
McCarthy said the market needs about 350 heavy aircraft between now and 2030, with 150 to support expected growth and 200 as replacements. The 777s have a large carrying capacity (the -200 has a maximum payload of 105 tons) and a wide fuselage that make them well suited for dense freight and light e-commerce shipments. The 777-300 has 14% more volume than a 747-400 and is ideal for lightweight freight that takes up space because it has more interior volume but a similar weight payload compared to its sister. That will translate into 10 more main deck pallet positions than the -200LR.
Remodeling a passenger aircraft for heavy cargo is a huge engineering endeavor that involves replacing the passenger door with a wide cargo entrance, installing a rigid 9G barrier in front of the cockpit, reinforcing the floor, plugging windows, adding main deck temperature control systems, and installing a powered or manual cargo-handling system.
Fortress is a New York-based private equity firm with $53.9 billion under management. It’s holdings include Aircastle, an aircraft leasing firm, and the Florida East Coast Railway.
In addition to being well financed, Mammoth, which was founded by co-CEOs Bill Wagner and Bill Tarpley in December, has assembled a team of more than 100 design, engineering, certification, maintenance and other professionals with extensive experience converting Boeing passenger aircraft to freighters.
Tarpley is a former Boeing program manager for DC-10, MD-10 and Boeing 767 conversion programs and then spent eight years as chief operating officer of aircraft leasing company Cargo Aircraft Management (NASDAQ: ATSG) where he bought and deployed 757 and 767 converted freighters.
Wagner, who began his career as a stress analyst at Boeing and worked at major aerospace companies, is president of Wagner Aeronautical. He is considered a guru in the conversion industry, having developed an approved design for the Boeing 727 and fathering the 757 conversion from Precision Aircraft Solutions in Beaverton, Oregon, which has sold about 158 units so far. He has also worked on Boeing 737, 767 and 747 “combi” conversion programs, as well as on the Airbus A321.
Mammoth Freighters said it has completed pre-modification flight tests of the 777-200. The engineering house expects to obtain Federal Aviation Administration approval in the second half of 2023 for its design to structurally modify the 777s, with an amended Supplemental Type Certificate (STC) submitted shortly thereafter for the -300.
That same year, Israel Aircraft Industries and GE Capital Aviation Services plan to deliver their first 777-300 converted freighter, dubbed the “Big Twin,” to a U.S. cargo airline. The joint venture is also obtaining STCs for its design change.
Average annual growth in air cargo volume is about 4.7%, but that is up more than 50% since the pandemic because of unbalanced inventories and supply chain disruptions that are driving companies to expedite shipments, and a surge in e-commerce spending. Meanwhile, airlines are reevaluating selling off 777 fleets with the shrinkage in long-haul travel and the availability of more efficient aircraft like the 787 Dreamliner. Air New Zealand in August, for example, announced plans to scuttle its entire 777 fleet in the coming years after retiring its 777-200s last year. Many 777s are being retired earlier than planned, and their relative low age makes them even more valuable assets for conversion.
Mammoth said it is already fabricating tooling and parts for its production line and has a Boeing data license that makes it easier to access maintenance and engineering information for any necessary updates. It plans to induct the prototype 777 for initial production work during the second quarter of 2022, with metal cutting and testing taking place simultaneously while it awaits the FAA certificate.
A typical passenger-to-freighter overhaul takes three to four months, but experts say larger aircraft like the 777 take about five months.
There are far fewer used 777-200s than -300s available, which makes it more difficult for competitors to offer since Mammoth has already acquired a large chunk of the available pool. Development costs are in the tens of millions of dollars and difficult to justify if they can’t be amortized over many units.
“We are probably going to command a real market position in the aircraft because we’re starting with it, and being first to market with any fleet type is important, especially if there is a limited quantity of them,” said McCarthy, who joined Mammoth from Precision Conversions.
Last week, Eastern Airlines, a niche passenger carrier, announced a quicker go-to-market strategy that only involves removing passenger seats and overhead bins, instead of making costly structural changes. The planes will be limited to carrying light boxes on the upper deck, which fits with the e-commerce shipments the company hopes to attract. Eastern officials said they have accumulated 35 aircraft and that the first modified freighter will start operating in the first quarter of 2022. By skipping a heavy conversion, Eastern says it can prepare planes for cargo mode in a couple of weeks.
But aviation industry experts are skeptical the concept will work. A serious downside is that the freighters will require much more labor to load and unload the cabin by hand. Passenger freighters temporarily being operated by airlines while travel remains muted by the pandemic can take several hours of work compared to pure freighters with containerized shipments that can be moved with specialized handling equipment. Airport services companies are already overworked because of staffing shortages and are turning away so-called ghost freighters in some cases. And without the same carrying capacity, many doubt the planes will be economical to operate once freight rates fall to normal levels and the price of jet fuel increases.