Boeing this week announced two new orders, including from a new customer, for its 737-800 converted freighter while a separate retrofit design from Israel Aircraft Industries for the same model gained access to the European market. This reinforces the latest forecasts for significant growth in narrowbody cargo planes converted from passenger jets.
Airbus is gunning for the 737-800 with its fledgling A321 that hit the market 18 months ago and the smaller A320 conversion, the first unit of which was delivered last week to an operator in India.
On Tuesday, San Francisco-based BBAM Aircraft Leasing & Management reserved production slots with Boeing (NYSE: BA) to transform nine more 737-800s so cargo can be loaded in the main cabin where people used to sit. The agreement brings BBAM’s total commitment for the converted freighter to 40.
BBAM will be the first customer to receive a conversion at a new modification facility set to open next year at KF Aerospace, a maintenance, repair and overhaul provider in Kelowna, British Columbia. In November, Boeing announced plans to open two 737-800 conversion lines at KF Aerospace, which is using a Boeing design and kit to install a cargo door, remake the interior and incorporate a cargo handling system.
KF Aerospace also performs conversions for Miami-based Aeronautical Engineers Inc. (AEI), an independent conversion specialist.
BBAM is supplying the aircraft to be converted from its own portfolio of 737-800 passenger jets, extending their life and return on investment. Other aircraft are being reconfigured at authorized Boeing providers, including Costa Rica-based Coopesa and Boeing Shanghai Aviation Services in China.
Express delivery companies and their outsourced transport suppliers are responding to relentless growth in e-commerce sales by continuing to add package freighters, predominantly small and standard-size jets that are economical to operate in domestic shuttle loops.
Airbus last week projected the express air market will grow at an average annual rate of 4.9%, outpacing general air cargo, and that express will make up a quarter of the airfreight market by 2041, an 8-point increase over 20 years. Boeing’s long-range outlook calls for about 1,300 conversions of standard passenger aircraft to meet cargo needs during that period, or about 46% of the total requirement combining factory-built and converted freighters of all sizes.
On Monday, the first day of the Farnborough International Airshow in the U.K., Boeing announced that Aircompany Armenia and affiliated Georgian Airlines have reserved slots to convert three 737-800 aircraft as part of the group’s plan to add more dedicated cargo airplanes to its operations in the Caucasus region.
“We are thrilled to bring more much-needed air cargo capacity to the region with the addition of three 737-800 Boeing Converted Freighters,” said Tamaz Gaiashvili, president of Georgian Airlines Group, in a news release. “The 737-800BCF has the payload, range and capability to carry both e-commerce and general cargo.”
Boeing said it will redeliver the first modified aircraft next year, with deliveries continuing into 2024. The converted freighters will be operated by Georgian Airlines, a startup cargo carrier based in Tbilisi that commenced operations in April 2021 and serves Europe, the Baltics, the Middle East and parts of Asia. The company operates two converted 737-800s, one by Boeing and another from AEI.
The three aircraft will be retrofitted with a large cargo door, reinforced flooring and wing boxes, a rigid barrier to protect the cockpit from shifting containers, and a cargo handling system. Work will be performed by Guangzhou Aircraft Maintenance Engineering Co. Ltd. (GAMECO) and at Taikoo (Shandong) Aircraft Engineering Co. Ltd. (Staeco) in China.
The 737-800 can carry more (52,800 pounds) and can fly further than older 737 variants. Boeing said it has delivered more than 90 aircraft since 2018 and has an additional 150 orders and expressions of interest since commercial production began four years ago.
IAI gains access to European market
Meanwhile, Israel Aerospace Industries said the European Aviation Safety Authority has certified its design for modifying the 737-800 to carry main-deck cargo. The green light opens the company’s cargo conversion kit for use by European conversion facilities and operators, adding capacity at a time of lengthy production backlogs for all types of aircraft.
IAI said the first two converted aircraft for which the new approval will apply have already been delivered to an unnamed customer in Spain, with an additional aircraft undergoing conversion and set to join the fleet soon.
IAI’s supplemental type certificate has already been approved by the U.S. Federal Aviation Administration, the Civil Aviation Authority of Israel, and the Civil Aviation Administration of China.
Last year, IAI established the first cargo conversion site in Europe together with its partner Atitech in Naples, Italy, for the 737-700/800 aircraft. IAI has recently opened new cargo conversion lines worldwide for other models, including the Boeing 767-300 in Ethiopia and the Boeing 777-300 in South Korea and Abu Dhabi.
A320 secondhand freighter debuts
The 737-800’s main competitor in the freighter sector is the Airbus A321 and, as of last week, its sister, the A320.
Elbe Flugzeugwerke (EFW), a joint venture between Airbus (DXE: AIR) and Singapore-based ST Engineering, said it delivered the first A320 reconfigured for cargo operations to Pradhaan Air Express, a new all-cargo airline in India. The plane is owned by the aviation management business of ST Engineering, which has a contract to lease up to five of the all-cargo planes to Vaayu Group, an aviation services company in the United Arab Emirates, which is subleasing the aircraft to Pradhaan.
EFW will begin retrofitting a second A320 for Pradhaan Air Express late this year, the companies said.
EFW had previously announced that Astral Aviation would be the launch operator for the A320. Vaayu Group didn’t respond to a message asking about the change.
Earlier this month, ST Engineering said it will lease four Airbus jets — two A320 and two A321 used passenger aircraft — reconfigured for cargo containers in the main cabin to Malaysia-based Raya Airways.
The A320 follows the September 2020 introduction of the A321 passenger-to-freighter conversion program. Only a handful of aircraft have been delivered so far compared to the 737-800, which had a three-year head start, but EFW’s order book is filling up fast.
A large supply of relatively young A320 and A321 aircraft are potentially available to cargo carriers and leasing companies interested in extending their life as passenger airlines reduce costs and environmental impact by shelving older aircraft. A 15-year-old A320 goes for about $14 million and an A321 for $19 million, not including conversion costs, according to appraisers.
The A320 has a smaller payload than the A321, 23 tons, with a maximum range of 1,850 nautical miles and usable containerized volume of about 5,600 cubic feet offering a desirable 85% stowage efficiency, according to EFW. It can accommodate up to 10 unit load devices and one pallet position on the main deck, and seven small containers in the lower deck. The 737-800 doesn’t have lower-deck capability for containers, only loose cargo.
Those features make it a strong candidate for e-commerce operations.
In related news, Aircraft Financing Germany recently said it had acquired one A330-200 medium widebody aircraft from CMA CGM Air Cargo, the new airline arm of the French container shipping line, to be converted by EFW in early 2024. CMA CGM has planned to remove the seats and use the plane as a light-duty freighter before eventual conversion to a heavy-duty freighter, but opted to stick with its existing fleet of four production A330-200s and two Boeing 777s, with orders for more 777s and A350 freighters still in the pipeline.
The A330-200 converted freighter can carry a gross payload of up to 67 tons (61 metric tons) for over 4,785 miles.
To meet the rising demand for freighter conversions, ST Engineering and EFW have also recently set up new conversion sites in China and the U.S., and plan to ramp up conversion capacity for all conversion types to over 60 slots per year by 2024.