Today we conclude our four-part analysis of the passenger-to-freighter conversion market. Three days ago, we began with a look at the evolution of that market over the last two decades, and then continued with some thoughts on how rapidly demand for the currently popular types would fade now that the first of the new types has entered service.
To round out Part II, we looked at one company — Air Transport Services Group — that had recently entered the conversion business in a big way, plus a successful conversion program from IPR Conversions for the ATR family of turboprops. Yesterday we continued our summary of who’s who in this business with a look at four of the seven conversion houses that offer passenger-to-freighter conversion programs for jet aircraft, and today we conclude with the final three. You can read Part I here, Part II here, and Part III here.
The seven major conversion houses are (alphabetically): Aeronautical Engineers, Inc, Bedek Aviation Group, Boeing, EFW, PEMCO World Air Services, Precision Aircraft Solutions, and Singapore Technologies Aerospace.
PEMCO World Air Services
Like many of the companies in this review, PEMCO World Air Services has a long history. Originally formed as Hayes Aircraft in 1951, and eventually renamed Pemco Aviation Services, the company expanded from its small start to provide a variety of maintenance, engineering, and conversion services to both commercial customers and the US military. In 2007, the company sold its commercial operations to Sun Capital Partners, while retaining its military business under the new name Alabama Aircraft Industries
The new commercial operation took the name PEMCO World Air Services, and continued both its MRO and conversion operations, including P-to-F programs for the 737-300 and 737-400. In 2009 it widened the scope of its conversion business with the acquisition of Alcoa/SIE’s 757-200 P-to-F STC in 2009, then expanded that STC to include P-to-combi conversions.
But things did not go well, and in March 2012 PEMCO filed a voluntary petition to restructure under Chapter 11 protection. Three months later, Singapore Technologies Engineering, through its US subsidiary Vision Technologies Aerospace, announced that it had made a successful bid at the bankruptcy auction for PEMCO’S MRO facility in Tampa, Florida, “and certain assets of PEMCO World Air Services Inc, including the Boeing 737 freighter conversion Supplemental Type Certificates.”
The restructure was successful, but, for whatever reason, ST’s plan to buy the conversion business never became a reality. However, even though PEMCO gradually returned to health, parent Sun Capital seemed to lose interest in the conversion side of the business, and did not follow through on a previously announced launch of new conversion programs for 737NGs.
For a while it seemed that, once interest in 737 Classic conversions waned, PEMCO would exit the conversion business. But that changed dramatically at the beginning of 2017 when Air Transport Services Group bought PEMCO from Sun Capital, and, four months later, at the Cargo Facts Asia 2017 event in Shanghai, announced the launch of two new conversion programs for the 737-700. One was a straight passenger-to-freighter conversion (with nine pallet positions), the other, under the name FlexCombi, will convert passenger 737-700s into a variable configuration that offers two combi options (6 pallet/24 passenger and 7 pallet/12 passenger) as well as an eight-pallet cargo-only configuration.
The first FlexCombi conversion is now underway at PEMCO’s Tampa (TPA) facility, for launch customer Chisholm Enterprises (for UAE-based end user Texel Air).
PEMCO declined to provide any information regarding its conversions to date, or its backlog.
Precision Aircraft Solutions
Almost fifty years ago, in 1971, Jack Erickson founded Erickson Air-Crane, and developed the world’s first helicopter logging business, using Sikorsky Skycrane helicopters to harvest previously inaccessible forests. Over the next thirty years the company stayed mainly focused on modifying helicopters for a variety of uses, including aerial firefighting, but in 2001 spun out a new, standalone business – Precision Conversions – to undertake the engineering, prototyping, and certification of a 757-200 passenger-to-freighter conversion program.
The program has been extremely successful, but it is worth pausing here for a moment to note something about Precision’s 757 P-to-F program that applies equally to many other conversion programs: That an aircraft type will “make a great freighter” is no guarantee of instant success. At the time Precision launched its program, there was universal agreement in the air freight and express industry that the 757-200 was going to be an immensely popular freighter, and Precision had no trouble finding interested customers. What it did have trouble finding was feedstock aircraft. The 757 was so popular with passenger operators that, even as individual airframes passed the age at which one might expect them to be retired and replaced, airlines refused to let them go.
So, despite being effectively the only supplier of what has since become the most popular freighter in the world, Precision went through some difficult years, waiting for supply of feedstock to catch up with demand for conversions. EFW faced a similar situation at one point with its A300-600 P-to-F program, as did Boeing with its 767-300BCF program.
In 2014, Precision Conversions widened its focus to include a variety of aviation-related services and rebranded as Precision Aircraft Solutions. It still only offered 757-200 P-to-F and P-to-Combi conversions, but with the end of the 757 era on the horizon, began looking at other possibilities. That search reached its conclusion with the formation in August 2017 of 321 Precision Conversions, a joint venture with Air Transport Services Group, to develop a passenger-to-freighter conversion program for the Airbus A321-200 aircraft.
At the Cargo Facts Symposium in Miami in October, 321 Precision Conversions and Luxembourg-based lessor and aircraft manager Vallair Capital announced that Vallair, through its wholly-owned subsidiary Vallair Solutions sàrl, was the launch customer for the program. The prototype aircraft (msn 891) is now in conversion at the Avocet facility at Sanford International Airport (SFB) in Orlando, but 321PC and Vallair have provided no further details about the order. Cargo Facts believes the number of aircraft involved is much greater than this first unit. How many? We don’t know, but a single conversion makes little sense as a launch order, and we expect the order is likely for as many as ten.
The state of Precision Aircraft Solutions’ currently active conversion programs:
- 757-200: Total conversions through the end of 2017: 90. Total in 2017: 20. Estimate for 2018: 22
- A321: Total conversions through the end of 2017: 0. Total in 2017: 0. Estimate for 2018: 0
Singapore Technologies Aerospace (ST Aero), is the MRO and conversion arm of defense and engineering conglomerate Singapore Technologies Engineering. ST Aero, the “world’s largest commercial airframe MRO provider,” has long been involved in passenger-to-freighter conversions, but, for most of that time, as a provider of touch labor for others (particularly Boeing) rather than as a developer of its own conversion programs. But while it still does serve as a conversion center for Boeing’s 767-300BCF, it is now primarily focused on its own programs.
The first big change came in 2007 when ST Aero signed a deal with FedEx for eighty-seven freighter-converted 757-200s, with ST to develop a 14-pallet conversion (based on Boeing data). The agreement was eventually expanded to 119 conversions, and ST delivered the last one in mid-2015. During this period, ST also added STCs for a 757 multi-role transport conversion and a 757 combi. Both of these programs were certified for commercial use, but the only customers to date have been the New Zealand Air Force (two transports) and lessor Guggenheim Aviation Partners (now Altavair), which ordered one combi that TNT Airways (now ASL Airlines Belgium) operates for NATO.
In early 2016, ST also received certification for a 15-pallet 757-200 P-to-F conversion, and immediately redelivered two to launch customer SF Airlines. The SF order was for five conversions, and, while none were redelivered in 2017, ST currently has two units in work, and will likely redeliver them in early 2018.
A second big change took place in May 2012, when ST Aero and EADS (now Airbus) announced an agreement under which they would jointly develop a P-to-F program for the Airbus A330-200 and -300. As part of the agreement, ST acquired a 35% stake in Elbe Flugzeugwerke (EFW) the MRO and conversion arm of EADS. This was followed in 2015 by an agreement that ST, Airbus, and EFW would jointly develop conversion programs for both the A320 and A321.
ST gained majority ownership of EFW in February 2016, acquiring another 20% and thereby upping its stake to 55%. However, the A330, A320, and A321 programs are marketed under the EFW brand, and we have discussed them as such, in the EFW section of this review.
The state of ST Aero’s currently active conversion programs:
- Under its own brand, ST currently only offers conversion of Boeing’s 757-200. To date, the company has redelivered 124 757-200s. Of these, 121 were passenger-to-freighter conversions, two were passenger-to-military transport conversions, and one was a passenger-to-combi conversion. ST has not redelivered any 757 conversions in 2017, but expects to redeliver three-to-five in 2018.
If you are interested in the freighter conversion market, be sure to join us at Cargo Facts Asia 2018, 23 – 25 April, in Shanghai, where we will devote two sessions to the future of the freighter fleet. Widebodies, narrowbodies, production freighters, conversions… Senior executives from the major conversion houses, as well as operators and lessors, will share their views. For more information, or to register, go to CargoFactsAsia.com.