20 more 747-8Fs for AirBridge

The big news from the Paris Air Show today was a Memorandum of Understanding signed by Boeing and Russia-based Volga-Dnepr Group covering the addition of twenty 747-8 Freighters to the fleet of AirBridgeCargo Airlines over the next seven years, as well as the addition of Volga-Dnepr’s An-124 heavylift freighter “to the long term logistics support for Boeing and its partners.”

Looking at the latter item first, Boeing has made considerable use over the last few years of Volga-Dnepr’s An-124 fleet to fly large aircraft subassemblies to its production sites, so the statement in the MoU does not come as earth-shaking news, but rather as the expansion and formalization of a pre-existing ad hoc arrangement.

The twenty 747-8Fs for Volga-Dnepr’s scheduled service subsidiary AirBridgeCargo (ABC), on the other hand, is definitely a surprise. ABC’s Executive President Denis Ilin has made no secret of the carrier’s intent to acquire one, or possibly two, more 747-8Fs this year, and eventually move to an all-747-8F fleet, but adding twenty? That is a massive influx of capacity.

AirBridge currently operates a fourteen unit 747 fleet, made up of six 747-8Fs, five 747-400ERFs, and three 747-400Fs. Assuming that the -400Fs and -400ERFs are retired as the new -8Fs join the fleet, that still leaves ABC increasing from fourteen freighters today to twenty-six by 2022. A strong statement of confidence at a time when most of the world’s airlines are shrinking their main-deck capacity.

Which is not to imply that we believe the confidence is misplaced. AirBridge had a record year in 2014, and last week reported cargo traffic up 24% y-o-y in the first five months of 2015. With that kind of growth, the need for more capacity is obvious. But twenty 747-8Fs is a lot of capacity.

And finally, we note that firming the MoU will not mean a twenty-unit firm order for Boeing. The additional twenty freighters “will be acquired through a mix of direct purchases and leasing.” The leasing aspect is interesting. ACMI operator Atlas Air Worldwide Holdings has nine 747-8Fs, but those are all in operation for other carriers. No other lessors have ordered, or taken delivery of, any 747-8Fs, so from whom will AirBridge lease any? One possibility is Boeing’s own leasing arm, Boeing Capital.

To learn more about freighter fleet dynamics, click here.