Listen: Future widebody market spoilt for choice with 777-8F offering

After months of rumors and build up, Boeing and Qatar Airways have turned the 777X freighter from mystery to reality: announcing a launch order for thirty-four aircraft and sixteen options with deliveries starting in 2027. This deal, being touted as the largest single order of freighter aircraft in Boeing’s history, means that the market for widebodies will be larger than ever in the years to come. What impact will this new aircraft have on the market and who benefits when customers are spoilt for choice? In this episode of “Cargo Facts Connect,” Deputy Editor Jeff Lee and Associate Editor Andrew Crider are joined by Jim Edgar, senior consultant at Cargo Facts Consulting, to discuss the new freighter and its rival, Airbus’ new A350F. They also look at the large widebody segment more generally and the potential effect Boeing's new offering will have on the market. A transcript is available below. This transcript has been generated by software and is being presented as is. Some transcription errors may remain. Jeff Lee Hello and welcome to this episode of cargo facts connect the podcast of cargo facts, the newsletter of record for the air cargo and freighter aircraft industries for over 40 years. I'm your host, Jeff Lee, deputy editor of cargo facts. Andrew Crider And I'm Andrew Crider, cargo facts' new associate editor. Jeff Lee Thank you for tuning in. We're back after a brief hiatus. And already it's been an eventful couple of months. Andrew, you joined us about a month ago? Which seems like the perfect time then? Andrew Crider It absolutely is. Thank you, Jeff. It's been a very interesting week. 2022 has been off to an impressive start. Just last week, Boeing announced their new triple seven dash eight F with Qatar Airways, in what they said will be the single largest production freighter order. This was a long time coming as Qatar and Boeing have been in toxins last year on the possibility of more triple seven F orders for Qatar. Jeff Lee Right. And that's just one of many interesting things that have already happened in 2022. And joining us to discuss this latest development today as our special guest, Jim Edgar scene and consultant at cargo facts consulting. Jim, welcome, and thank you for joining us. to kick things off, I guess what was your your initial reaction to Boeing's unveiling in this rather large order that came with it? Jim Edgar Well, I think it's fair to say this was much anticipated, particularly since last summer. Airbus similarly announced the launch of the A 350 F. And then, as you recall, last fall at cargo facts symposium in Las Vegas, Crawford, Hamilton and Brian Hermesmeyer, were on the last panel of the event. And it was most interesting, but at that point, of course, Boeing had not formally launched but we're anticipating doing so. So it was not unexpected, but it was most interesting to get more detail we had, as you know, we had been following for quite some time. presentations to customers that we became aware of. And so we were kind of gathering information about what exactly the triple seven, eight F might look like. So I have to say two, there was an awful lot of press over this last week, because it was just a week ago today that the formal announcement was made. And of course with the 36 firm, I'm sorry, 34 firm from Qatar and 16 options. And I I personally saw probably two dozen articles in the general and trade press. And so I've been trying to digest all of that. But this will sound self serving. But of all the many many articles from reputable sources that I've read. The most helpful was the one that our own cargo facts consulting managing director Frederick Horst offered a week ago on the cargo facts insights, subscription service titled triple seven, eight f versus a 350 F. A battle of equals. And I think that's a really good summary of the situation because they are very, very comparable in that article, and I would recommend listeners to if they haven't already get a hold of that. But there's a very excellent table that Fredrik put together with available information that makes a number of significant comparisons beginning with the triple seven 200 F which of course has been in service for a very long time against the triple seven eight F as much as we know at this point, and then the three a 350 F and and in the area of volume, it makes comparisons giving the advantage a slight advantage to the triple seven, eight F slightly higher structural payload. But there are areas where the 8350 F at this point in time with as much as we know, look to have the advantage and that includes range. Again comparing with the triple seven, eight F not the triple 7200 F because that's a little bit more range. Certainly a timing advantage because the A 350 F expects to be in service two years earlier than the triple seven, eight F. And that's that's important because there's going to be operators that ordered the 358 that are going to have a two year head start in terms of the better economics and efficiencies that the A 350 F offers. So there's a lot of a lot of really good information in that to that article and the table itself. But as we make contact with the OEMs and have opportunities to do deeper dives, and particularly on the Boeing side, as information becomes available design gets more stable, or more firm will know more in terms of actually making comparisons the only area that we don't have a really good understanding because of a lack of specific weights. And I know that Frederick's done a really good job of estimating maximum takeoff and zero fuel weights is in the area of economic efficiency. And of course, that drives a lot of decisions. So the only the of all the articles that I am coverage that I read, the only economic comparison that I could find were actually statements by Boeing Commercial stand deal. And he made the statement and I'm assuming he's comparing it to the A 350 F, that the triple seven, eight f will be 4%. fuel efficient or consume 4% less fuel and emit 4% less carbon. So those were the only real economic comparison that I could find. And we don't know the basis of that comparison. So I think that's what remains in terms of our information at this point is to get a little bit more specific technical data so we can make those economic comparisons because that that will be very significant in carriers decisions regarding those aircraft. Andrew Crider Speaking on the economic conditions, I'm a little curious as far as the production more specifically, I'm wondering how the new aircraft how this is going to affect the current triple seven F production as far as their timeline order backlog? Jim Edgar Well, all I can speak to is is during my tenure. Usually, freighters and passenger aircraft will share the same production line. There's there's exceptions to that. But so my guess would be that because of the similarity that the triple seven passenger X version stays shaped and dash nine will share the same production line as the the freighter the de shade freighter. And we do know that the length on the day sheets, a slightly two frames different from the passenger version, and that's kind of a first usually ease the same exact length of fuselage. But I wouldn't expect there will also I should also mention there, there will also be a transition phase where you're phasing out the the existing model, in this case, the triple seven 200 300 and so on, in favor of the de shade and dash nine. So you know there's a there's a process that goes on that makes that transition. But generally to answer your question, Andrew, I would expect it without having intimate knowledge of the situation that they'll use the same production line, and that there'll be a transition phase between the old triple seven models and the new triple seven models, but the freighters in the passenger aircraft will share the same production line. Jeff Lee And as I guess it's interesting to think about how the current triple seven backlog continues to play out and how many customers will kind of jump in to order more triple seven F Fs before Boeing decides to switch completely over to the new triple seven dash eight F. And just to add to that, I mean Qatar 2312 current triple seven F in the order as well. But going back to when you said that there has been a lot of media attention on this. I just, I guess a couple of points. One is that I think For obvious reasons, the media is now focusing much more on the cargo side of the business, whereas before they may not have given it as much attention. Though this, I agree with you, I think there has been a lot of discussion and just a lot of lot more coverage on this launch, I guess part of that was because of just the sheer size of the of the order. And given the the other sort of dispute that Qatar had that may or may not have played into this. And the other thing I was going to say was that now with the E 350. Of course, launching that Airbus launched last summer, without firm orders, and then orders and commitments coming in in the final two months of 2021. We now have, for the first time, both Airbus and Boeing in the large production freighter market. And it's shaping up to be an interesting but of course, fierce competition in this segment. What do you make of that? And you know, how will we see this rivalry play out between the two manufacturers? Jim Edgar Well, I I again, revert to Frederick course, excellent article and cargo facts, insights. But I'll just read for you. I think it's a really good summary, Airbus has clearly spent a lot of time understanding the needs of the air cargo market, and has come up with a sellable product. Boeing has a long history of engagement with the cargo market and appears to have come up with a worthy successor to the triple seven 200. F. This is great news for operators who now have a real choice, I couldn't have said it better. I mean, that sums it up. And I don't want to go too far back and in memory down memory lane, but a slight correction to your statement, there was a time when there was an A 380 F with 27 firm orders from four different customers. At the same time that there was a seven for seven day shade F with a firm orders from customers. So there was a brief time until Airbus made the decision to not produce the A 388 F and but certainly, the A 350 F is a very capable and competitive freighter in the large category. Even though the triple seven eight f will be ultimately the biggest freighter when it when is introduced in 2027. So Airbus, Airbus has learned a lot, and they definitely were paying attention. And I really think that was evident in the outstanding presentation that Crawford made at cargo facts symposium. And, you know, just to one step further, I'm really looking forward to hearing from both Boeing and Airbus at the upcoming cargo facts, EMBA in May, because every every conference, every announcement, every order, is an opportunity for clarification and kind of see where this is all taking us. Airbus has, you know, 22, I think it is firm orders from for very quality customers and operators. And Boeing has got 34 firm orders from one that should be mentioned, the third largest cargo carrier in the world. So it'll be interesting as orders come in. It's going to be very, very competitive. And just fascinating to see how this unfolds and again, what details we can analyze in in determining the relative efficiencies of each aircraft. Jeff Lee Yeah, and the other interesting thing I was going to say, actually, was that the Boeing launched this treaty version before the passenger, triple 7x, even before even being certified in law alone and enter into service. And that just is a reflection of the, I guess, the state of the market and just how hot cargo is and how and the importance that both the manufacturers and I guess the operators are placing on the on the business. But you know, moving from production, large wide bodies, we also at the same time have potentially three, triple seven conversion programs. So obviously, we have the AI, and GS triple seven 300 arsf. That's the most advanced, they cut the door last year. And actually, I just confirmed to me recently that they, they've completed all that and then moving on to strengthening the floor beams and all that work. And they expect to roll out the that first prototype by the end of the year. The second one, I guess the second and third ones are the mammoth breeders triple seven conversion for both the 200 LR and the 300 Er. And we also have this Wichita State University triple seven conversion program, they have a triple seven 300 er in Wichita right now, actually. And we're still trying to find out more on that. But if all three get certified, we will have three triple seven conversion programs. The triple seven dash AF and the 350 freezers of five models in the large wide body segment. What are your thoughts on that? I mean, does the market need all this variety? Jim Edgar The only reference point would be you know, during my tenure at Boeing and when there was a 747 400 production freighter and er production freighter as well as a DCF. And I think generally it's safe to say that it's a slightly different customers with different customer requirements for a converted Aircraft of comparable size compared with production aircraft, obviously, especially at the large size, the production aircraft are very capital intensive. So you expect extremely high utilizations oftentimes even more than their passenger counterpart, and a carriers that are running at very, very high load factors, high loads. And usually command a better yields on the converted side util because the capital cost is a is a huge advantage for a conversion, you're usually a slightly different customer set. And you know, density comes into play range utilization, but it's not as a significant in terms of the kind of traffic that they carry. Because the capital pressures are not the same. So it's usually again, as I look at the 747 situation, you know, 2025 years ago, it was usually a slightly different customer set. But I think those lines are going to start blurring because as you pointed out Jeff earlier, the trend, both relative to passengers in car rate interest in air cargo now. So I think that there'll be more and more carriers that will be willing to have mixed fleets, instead of you know, well, they're a line haul production freighter operator, and another might be a more of a converted operator. So I think there'll be more mixed fleets. Whereas in the past, we had kind of a different carrier step that would be tend to go for production versus so there's going to be a lot of competition. And I'm really excited about watching this on the large size because we really haven't had a 747 conversion program for a while. So it's an all production aircraft and then resale of existing large freighters. And so now, we kind of have a whole new dimension to it. That will be interesting again to see how it plays out. Andrew Crider That's interesting that you bring up the the customers that we could see. Can you tell me a little bit more about that customer base Shoot, who you think they are, as far as bringing down regionally based? Are for all these different models? Or maybe they prefer conversion? Jim Edgar Well, I think, first of all, you're gonna see, in the large size converted, you're gonna see, express carriers get more involved. Certainly, that's been the case in the medium sized category with Amazon. But you're gonna see that proliferation. I think, too, that there's a, there's a real possibility here as capacity continues to be constrained, because you recall, during the worst of the pandemic, basically, the park fleet vanished, and everything that was remotely possible was pulled out of storage, I think you're going to see more line haul traditional production, freighter operators, get involved in conversions. I mean, they're, they're good aircraft, and there's younger and younger feedstock going in for conversion into large size conversion programs. So again, I think those lines are gonna blur. And you have to be pretty flexible in your thinking about what could be target operators for each of the different possible conversion candidates that had been offered Andrew Crider that and on the conversion candidates, do you see a potential for a shift for the value of the current triple seven feedstock? Jim Edgar Um, you know, I'm not an expert, Andrew, on, you could go to Doug Kelly and some of the people that we feature in our cargo fax conferences, but because of the lagging intercontinental passenger market, I think you're going to have much more younger and more desirable feedstock opportunities. You know, it's no secret that the Intercontinental passenger market at this point, it's going to be a while before it returns. There's still market pressure from air cargo 7% growth last year, roughly. So I think there's going to be younger and more desirable feedstock available just because of that, that interplay of dynamic between passenger and air cargo market. Jeff Lee Right, I mean, we are seeing, especially triple seven 300ers. That's the I mean, there are so many that are just lying around and parked. And many of those aren't actually that old. But obviously they would make for excellent conversion candidates, should the owners decide to do that. For the triple seven 200LR obviously we know that there are there aren't that many that can serve as feedstock, because there were only around 60 that were produced. But yes, I mean, the triple seven 300 yard really is there's going to be a lot of choice and a lot of desirable candidates, like you said. So we'll obviously continue to see more of these heading into conversions, particularly as these programs ramp up and get certified. But and they'll all be very interesting to cover. That's all the time we have for today. Thank you so much, Jim, for your thoughts. And to those of you listening. Thank you for tuning in to this episode of cargo facts Connect. For more multimedia content like this, check out cargo facts.com and search cargo facts connect on iTunes and Spotify. Join us again next time. Subscribe to Cargo Facts Connect on iTunes or Spotify , or download the episode on Transistor . Cargo Facts EMEA will take place LIVE May 9-11 in Dubai. Learn more and register.

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