Watch: More 747Fs reactivated, plus the imminent induction of the first 777-300ERSF

For the week ended April 16, Cargo Facts reported on yet another older - vintage freighter-converted 747-400 being prepared to exit the desert . Even as domestic passenger travel markets show signs of recovery in the United States, Mexico and elsewhere , long-haul travel remains a sliver of 2019 capacity. Large widebody freighters remain in high demand, yet the market has little to offer. Meanwhile, a new widebody passenger-to-freighter conversion program under development by Israel Aerospace Industries (IAI) confirmed plans to i nduct its conformity aircraft this June, but the first redeliveries will not occur until 2023. In this Cargo Facts Weekly Wrap, Charles Kauffman and Jeff Lee take stock of the stored 747 F fleet and discuss how freighter-converted 777-300 Fs might fit into 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. Charles Kauffman Hi everyone and welcome to this episode of Cargo Facts connect the podcast and video series of cargo facts, the newsletter of record for the air cargo in freighter aircraft industries for over 40 years. I'm Charles Kauffman, Senior Editor. And this is our weekly wrap for what's happening in the industry this week. Before we begin, I'd like to thank our sponsors and advertisers 321 precision conversions and grant international HDI c cubed aerospace VFW IPR conversions and uldrentals.com. I'm pleased to be joined today by Jeff Lee, our associate editor. It is April 16 2021. And here are the biggest news items from our editorial team this week. So this week, we had a story on us Ghana, South Korean based carrier selling a 747 400 freighter that had been converted from combi configuration to an old cargo configuration by Israel Aerospace Industries in 2007. It was an earlier vintage air frame, so quite old for even a freighter conversion, and the unit appears to be destined for Western global airlines. And well, Western global hasn't made clear its plans for the aircraft, which had been sitting in the desert since 2017. We can see that engines are being brought into place so that the aircraft can take to the skies again. Which for an old freighter like this is really a recurring narrative that has played out played repeatedly during the pandemic, isn't it, Jeff? Jeff Lee It definitely is. And I mean, it's interesting, because we don't know exactly what we don't always know, with all of these reactivations when exactly things were initiated, whether that's you know, remarketing, the aircraft for sale for lease or securing the parts needed to reactivate it. And we know these things can take a while. But we I guess we started first started seeing signs of, of these reactivations, around March, April last year. And it's when it comes to the actual aircraft. It's been very diverse. I mean, really, in the case of Atlas, for example, some of the well, four of the seven, four sevens only been stored for a couple of months. But on the other end of the spectrum, we had three that was sort of the for seven years in the case of national airlines. But, you know, in any case, it is still happening. And the fact that it is happening means that the market is obviously strong enough to support it. And I don't think we've we've seen the last piece reactivations yet, Charles Kauffman that's fair. And in by your estimates how many more 7474 hundreds are sitting in the desert. And you know, how many of those could we potentially see reactivated in the coming months. Jeff Lee There really aren't that many left once we do know and think are likely to be reactivated. But one there's the ACTA airlines aircraft that was the head of tail strike last February. And they had previously expected it to be ready for service at the end of 2020. But we now know that they intend to have it in service by around May. And the rubber also signs that an EPA 747 400 PSF that has been parked in the desert is now being prepared for return to serve. This using parts from a Lufthansa seven for seven passengers, some 474 100. And of course, we have the two China Airlines production freighters that are still parts. But I mean, I do think we will be seeing those on the move soon. And, you know, speaking of seven, four sevens, there's potentially exciting development in the works, but I'll just leave it at that for now. But I'm going back to the point about why carriers feel comfortable with these reactivations. I mean, I mean, I'm interestingly enough, most of the players reactivating six freighters, suddenly 747 freighters don't have major passenger operations, if at all. And, you know, it's really just a case of not having a choice at all, given the level of uncertainty in the passenger market. I mean, so it's, you know, it's but in that respect, it's not that surprising. Charles Kauffman No, that's a good point. I mean, there there are few alternatives, particularly on some of those longer haul lanes, where freight or capacity has, has always delivered the the majority of, of air cargo along the lane. But still, the there was some reliance on on belly hold capacity. And although we've seen some promising indicators from from oaG, and just by looking at passenger flight schedules, at least on the domestic side, you know, comparing summer schedules to, you know, 2020 2019 2019 in particular, there, there are some, some positive signs, you know, particularly Mexico, South Korea and China obviously have have been consistently doing pretty well, some of the other Asian countries in Asia. But on the long haul side, I mean, they're even the more optimistic forecasts that I've seen don't really predict a return of long haul passenger seats and subsequently, air cargo capacity in the belly hold for at least one to two years. And so what's what's interesting is at the moment, you know, there there really, there really aren't many other options on the market right? We do have the triple seven 300 vrsf freighter converted three triple seven which is I is is working on at the moment, but even there, we're looking at 2023 at the earliest. And most of those initials redelivery slots are are allocated to Digi CAS some of which are already promised to operators like polluted air and until then there's there's nothing but the triple seven again. you'd be hard pressed to to order and or find one of those available on the market. So even though an operator or any any wide body operator could could make the economics of the triple seven production freighter work in today's market, many general cargo carriers don't have the the network or scale necessary to get the utilization out of the aircraft's to to operate profitably. So they're looking to other types, potentially the triples and return vrsf for or used freighters if they do eventually become available. But that's that's partially why we're seeing reactivations today Jeff Lee even 747 classics for example, but you know, speaking of the 777 300 freighter conversion, the that prototype aircraft actually made flypast as part of Israel's Independence Day celebrations. Just you know, yesterday, I think. But that's probably the last time one of the last times it will be flying in in its current form, isn't it? Charles Kauffman Yeah, I sure hope so. At least the the expected induction date for that aircraft is is In June, so just over a month out from from today, and I mentioned earlier this week that they had completed the critical design review for its triple seven 300. ers have programs. So yeah, it's it's time to actually cut metal and start the conversion process. Jeff Lee And it should be on the ground in the hangar for some time. But you were talking about the costs of acquiring an operating triple seven production traitors, and that being a barrier for some, you know, lower utilization operators. But when it comes to the triple seven 300 arsf, obviously the economics get, you know, a bit more interesting and different, don't they? Charles Kauffman Well, yes, certainly, you know, an aircraft that is, you know, at a mid life stage, you know, 15 to 20 years or so. With with potentially engines with with low cycles remaining. That is a very different economic picture compared to a new build production Frater. So I spoke to mark house or an appraiser earlier this week. And, you know, we're currently looking at feedstock in the range of 20 to $30 million. Now, you add that to conversion costs around $30 million. And you know that, that brings your your cost to acquire and convert a triple seven 300. Er to the 50 $60 million range. You compare that to list prices, at least for a brand new triple seven production freighter $352 million or so according to Boeing. So there's quite a differential there. And that the conversion from a price standpoint is certainly attractive, especially for operators looking for volumes and the 300 yards is larger, not much of a benefit on the payload side. So for general cargo operators that will still go see how that that does play out. But as we've seen with many conversion programs, at least in recent times, it seems that once again, engines will will to some extent dictate pricing. So Gd 90 engines are, are quite expensive overhauls are, are not cheap. And then life limited parts are also quite pricey, with with some of the more expensive parts, hovering around $1 million per part. So you know, that's something something that we'll be watching. And, you know, at least launch credit the launch customer for the program, g Cass is we know that they're bringing GE Aviation into the equation. So that those those issues are perhaps not as acute for, for G cast with those links. But we don't yet have an updated picture of where the the economics and lease rates will land, given the trajectory of triple seven 300. Er feedstock values, as many of the pipe remain parked during the pandemic. Looking ahead to next week, what's on tap? Jeff Lee Well, we obviously have our cargo facts Asia event, and we'll be presenting sessions there. And, you know, it will be interesting to hear from from carriers, you know, because it's it's been more than a year since since we entered the pandemic situation and, you know, then I'm sure there'll be some news and developments from from this region's carriers Charles Kauffman Yeah, I definitely. Looking forward to it. And I expect You're right. I'll be interviewing Eddie view vice president cargo of China Airlines on Monday during a fireside chat. And of course, as we've we've covered extensively in cargo facts, China Airlines, has been one of the more successful cargo operators throughout 2021. Really rising to the sum of the challenges of the operations during during the pandemic and also operating out of a base in Taiwan. Certainly has been a a major has played a major role in in delivering semiconductors and whatnot and they're certainly fleet developments with with the carrier given the incoming triple sevens on order. So there's there's much to discuss, and I'm excited, but unfortunately that's that's about all the time. We have Day Two, those of you listening thank you for joining us for the weekly wrap on cargo facts. For more multimedia content like this, check out cargo facts.com and search cargo facts on iTunes, Spotify or wherever you find your podcasts. Subscribe to Cargo Facts Connect on iTunes or Spotify , or download the episode on Transistor . Cargo Facts Asia, taking place April 20-21 as a virtual experience, is the event for exploring opportunity in the Asia-Pacific region. The event continues to bring together the best, brightest, and most innovative executives in the global air cargo industry. Learn more and register at www.cargofactsasia.com .

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