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Air Canada looks to freighters to grow cargo business

Charles Kauffman by Charles Kauffman
November 9, 2020
in Carriers, Freighter Conversions, News Archives
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Following a successful pivot to cargo that has been reliant on extensive cargo-only flying during the COVID-19 pandemic, Air Canada plans to permanently convert some of its owned 767-300ERs to full-freighter configuration.

Air Canada plans to convert some of the 767s into freighter configuration. Photo/Air Canada

While general cargo has long been a focus, the carrier intends to increase its participation in the e-commerce market. “Several” 767s will be converted as soon next year, according to Lucie Guillemette, EVP & CCO of Air Canada, on a recent earnings call. Adding the freighters will be subject to “concluding satisfactory arrangements with our pilots.”

Prior to the pandemic, Air Canada operated five 767-300ERs, and its low-cost subsidiary Air Canada Rouge operated twenty-five. Ownership of the airframes is mixed, and the carrier did not disclose the exact number it intends to convert. President and Chief Executive Officer Calin Rovinescu told analysts during an earnings call that it did not need a massive dedicated freighter fleet to drive greater synergies with its widebody passenger network.

Rovinescu did not rule out ACMI-flying or domestic flights, but said that its freighter operation would have an international focus.

Like many combination carriers, cargo has been a bright spot amid lower passenger demand. Air Canada’s cargo revenues surged 22% to CA$177 million in its third quarter ended Sept. 30 — a dividend from cargo-only flights by the carrier utilizing 777s and 787s as well as four reconfigured 777-300ERs and three reconfigured A330-300s.

The carrier is forecasting 2020 cargo revenues to hit CA$850 million in part because cargo-only flights will continue. Air Canada expects to operate about 100 cargo-only flights per week in Q4 using a mix of widebody passenger aircraft and its temporarily-seatless widebodies.

Air Canada has controlled freighter capacity twice in the past and “neither of those two circumstances were particularly appealing successes,” according to Rovinescu. In 2016, Air Canada ACMI-leased 767-300F capacity from Canada-based Cargo Jet and operated flights between Canada and Latin America via Atlanta (ATL) and Dallas/Fort Worth (DFW). The operation ended in 2017.

Much about the air freight market has changed since 2016. The widebody capacity crunch paired with burgeoning e-commerce demand could create “the right kind of cost structure.”

With cargo traffic of 2.1 billion freight tonne kilometers, Air Canada was the No. 31 cargo carrier last year, according to Air Cargo World’s Freight 50 ranking.

Tags: 767-300ERAir Canadacargo-onlycoronavirusCOVID-19Premiumwidebody conversionswidebody freighter
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