Etihad Airways, which posted record results for the first half of the year, solidified an expression of interest with Airbus on Wednesday to purchase seven future-model A350 freighters to expand its cargo operations.
The Abu Dhabi-based airline earlier this year placed a tentative order for the A350 freighters, an offshoot of the popular A350 passenger jet that is in final development as a cargo jet.
Etihad is one of six customers for the all-new freighter. Airbus now has 31 firm orders from Air France, Air Lease Corp., CMA CGM Air Cargo, Singapore Airlines and Silkway West Airlines. Airbus (DXE: AIR) for the first time is making a concerted challenge to Boeing’s dominance in the freighter business.
Boeing’s answer to the A350F is the next-generation 777-X, now designated the 777-8 in the cargo variant. Boeing (NYSE: BA) has more than 50 orders for the 777-8, 34 of which are from Qatar Airways. Lufthansa Cargo and All Nippon Airways are also taking some 777-8s, with Ethiopian Airlines still on the fence. Cargolux says it will modernize its 747 fleet with 777-8s but has not made any real commitments yet.
Etihad already operates five A350-1000s, the largest passenger version of the model and the one the cargo jet is based on. Fleet commonality is a major consideration of airlines because it simplifies pilot training and maintenance.
The A350 is a long-haul freighter capable of carrying a 120-ton payload. More than 70% of the airframe of the A350F is made of advanced materials, resulting in a 33-ton lighter takeoff weight and generating at least 20% lower fuel consumption and emissions over Boeing’s legacy 777 freighter, according to Airbus.
Airbus’ recent 20-year cargo forecast said 3.2% annual growth in cargo demand, led by the express sector, and the need for aircraft replacements will require 2,440 cargo jet deliveries, including 560 large widebody jets. Nearly 900 of those will come from new production and the rest from passenger conversion.
Cargo exceeds one-third of total revenue
Last week, Etihad announced record-breaking first-half operating profit of $296 million and cargo revenue of $802 million, a 6% gain from the same period in 2021.
Cargo revenues remained strong despite increased passenger volumes limiting space for cargo in the lower deck, resulting in a 19% reduction in freight carried (325,203 tons). Cargo represented a 35% share of total revenue, a large share for most hybrid airlines. Airlines have increased revenue this year despite softer demand because a limited supply of airlift is propping up rates.
Etihad also operates five Boeing 777 freighters.
The company said freighter on-time performance was 83% despite airport ground handling delays across its network.
Etihad said it has seen business grow for pharmaceutical and live animal shipments thanks to ongoing investments in infrastructure and new products to ensure safety and product standards are met.
It recently began using improved thermal covers that it says dramatically increase temperature protection for pharmaceutical cargo during aircraft loading and unloading.
Energy-saving cooler units
Etihad Cargo also reported an 81% penetration rate for electronic airway bills, as it moves away from a paper environment for conducting business. Features added to its new online booking portal resulted in 57% more bookings made via the portal, and the carrier launched a Mandarin version of its website and booking portal to better serve customers in China, which represents more than 20% of its operations.
On the environmental front, Etihad Cargo last month agreed to collaborate with Luxembourg-based B Medical Systems to develop a more sustainable temperature-controlled container, designed specifically for the aviation industry, that uses passive cooling technology. Many refrigerated containers currently have multimodal applications.
B Medical Systems makes medical refrigeration devices.
The units will be designed to retain temperatures from minus 112 to 77 F for up to five days without requiring an external power source. Reducing the need for active power to maintain conditions for temperature-sensitive pharmaceutical shipments will reduce carbon emissions. B Medical Systems’ current portfolio includes products that use solar energy as well as green refrigerants.
Etihad Cargo has also replaced aluminum unit load devices with lightweight containers, which can provide a weight savings of more than 440 pounds, lowering fuel consumption and CO2 emissions.
Etihad achieved its operating profit despite a nearly 60% increase in fuel costs. Operating costs only increased 26% despite a 46% increase in deployed passenger capacity.