Challenge Group, Israel’s only all-cargo operator, on Monday announced plans to lease two additional Boeing 777-300ER converted freighters as it aggressively pursues fleet expansion to increase market reach amid strong shipping demand.
The airline said it reached agreement with global lessor AerCap for two of the former passenger jets, which are being retrofitted by Israel Aerospace Industries to carry large cargo containers. It previously committed to take four 777-300 passenger-to-freighter conversions.
IAI is expected this year to be first to market with a converted 777 freighter, once its design for adding a wide cargo door, reinforcing the fuselage, modifying the crew compartment and making other changes is approved by regulators. The 777 freighters in service today are all production models made by Boeing.
It’s unclear when Challenge Group will receive its initial 777 freighter, but when it does it will likely be the first to operate a converted 777 from a base in Europe. The 777s will be registered to its Maltese operation.
Tel Aviv-based Challenge Group operates 10 aircraft (six Boeing 747-400s and four 767-300s) across three airlines licensed in Israel, Belgium and Malta. Its main hub is at Liege Airport in Belgium, where it has a 430,500-square-foot cargo terminal. A logistics subsidiary also handles middle-mile delivery to distribution centers at European destinations. Having an air operators certificate in different countries allows the company to make use of each jurisdiction’s traffic rights.
Last year, Challenge Group added two Boeing 767-300 converted freighters by IAI and two Boeing 747-400 cargo jets. One of the 747s was owned by China Airlines and in desert storage until August, according to the Planespotters.com database.
Two and a half years ago, Challenge, formerly CAL Cargo Airlines, only had four 747-400 cargo jets. The 747s allow the company to handle a large amount of nonstandard cargo.
Challenge Group last month said the latest jumbo jet is primarily being deployed to carry e-commerce shipments from China but also will address rising demand for perishable transportation out of Africa and support trans-Atlantic business.
The additional 767 aircraft enabled the company to launch a new twice-weekly service to Delhi, India, in early October, complementing its three existing weekly flights to Mumbai used by pharmaceutical, automotive, textile, electronics and high-tech customers. Challenge Group in December launched twice-weekly 767 service to Nairobi, Kenya, from Liege. Earlier in the year, it opened a route to Dubai via Tel Aviv.
The medium-size freighters also freed up capacity on 747 aircraft for increased long-haul work between Europe, Asia and the United States, according to a Challenge Group news release.
Last year the airline transported more than 200,000 tons of cargo, including 5,000 horses and 600 aircraft engines. The company recently invested in a specialized engine dolly with advanced shock-absorbing cushions that protects sensitive engines from tarmac vibrations during the journey from the offloading point to the aircraft door.
777 conversion waits for green light
The 777-300 passenger-to-freighter development program is entering its final phase, Israel Aerospace Industries said in a statement provided to FreightWaves.
IAI, which has decades of experience converting Boeing 737s, 767s and 747s, said it has secured dozens of orders for the 777-300 conversion. An IAI official in June 2023 claimed the company had 60 firm orders for the aircraft. Canadian all-cargo operator Cargojet early last year pulled its reservation for four production slots because of concerns about tepid market conditions.
IAI partnered with AerCap (NYSE: AER) on the conversion program. AerCap is supplying used 777s from its portfolio that have reached their useful life as passenger aircraft and is leasing the modified units to cargo airlines.
Michigan-based Kalitta Air is the Big Twin launch customer and committed to lease seven airframes. Other customers include Emirates, with an order for 10 777 conversions, and Taiwan-based EVA Air.
The redesigned jets are dubbed the “Big Twin” because of the 777’s size and two GE-90 engines. With 25% more interior volume than a 777-200, the 777-300 Extended Range freighter is well suited for lightweight e-commerce shipments that take up a lot of space and don’t weigh as much as other commodities. It has 14% more volume than a 747-400 converted freighter and is 21% more fuel-efficient, according to IAI.
The reconfigured 777-300 is scheduled to conduct final validation flights with the Federal Aviation Administration in the U.S. during February. The FAA and Israel Civil Aviation Authority are expected to issue supplemental type certificates (STCs) for commercial use by the end of the first quarter or early second quarter, the IAI statement said.
The company has already completed conversions on four aircraft. Five more aircraft are at different stages of modification at IAI hangers.
“Following STC approval, five to six aircraft will be released to the market immediately,” IAI said.
The aircraft will help an air cargo market where demand increased more than 10% last year and widebody freighters could ease capacity constraints, especially in the busy trans-Pacific corridor where only 15% of pre-pandemic passenger services have been restored because of tensions between the U.S. and China.
IAI originally planned for the plane to enter service in 2022, but the pandemic disrupted development and the supply of components. U.S. and Israeli certification of the airframe modification design has also been slowed repeatedly since 2023. The prototype took its first test flight in the fourth quarter of 2023.
Aerospace executives say many new conversion programs have been delayed because the FAA and other air safety regulators are dealing with manpower shortages and have been preoccupied overseeing Boeing’s extensive manufacturing problems in recent years. FAA officials are also extra cautious after fallout from the deadly crashes of the 737 MAX, quality control problems with 787 fuselages and a door plug on a 737 MAX9 that blew out during flight raised questions about the thoroughness of the agency’s oversight.
IAI has arranged production partnerships for 777-300 conversions with Etihad Engineering in Abu Dhabi, Sharp Technics K at Incheon airport in Seoul, South Korea, and Ascent Aviation Services in Marana, Arizona, to help expedite deliveries.
(Correction: An earlier version of this story incorrectly said that the maximum payload weight of the 777-300 converted freighter is greater than that of a 747-400.)
Click here for more FreightWaves/American Shipper articles by Eric Kulisch.
Write to Eric Kulisch at ekulisch@freightwaves.com.
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