CF EMEA: Optimal conversion feedstock for 737NGs and A321s remains limited

Conversion feedstock for newer narrowbody types including the 737-800 and A321 are available in larger numbers, but wider availability is not translating into a greater supply of the airframes most suitable for freighter conversion, according to lessors and carriers during a panel at Cargo Facts EMEA. Although the return-to-service of the 737 MAX and lower passenger travel demand during the pandemic have freed up airframes, the majority of airframes available in the marketplace are either too old or too young, according to Richard Greener, senior vice president and manager of GECAS Cargo. “There’s a lot of older 2000 to 2002 feedstock, and then there’s 2012, so there’s a bit of a mismatch at the moment,” said Greener. “At the end of the day, the operators will choose what aircraft they need. We feel that 2005-to-2007- or 2008-vintage is probably the best aircraft,” he said. [caption id="attachment_416048" align="alignright" width="600"] Clockwise from top left: Cargo Facts’ Jeff Lee, Titan Aviation Leasing’s Joerg Andriof, Texel Air’s George Chisholm, SmartLynx’s Edvinas Demenius, Titan Airways’ Alastair Wilson and GECAS Cargo’s Richard Greener.[/caption] Bahrain-based Texel Air, which operates a fleet of 737 Classics and 737NG freighters, cautioned that converting newer frames runs the risk of inflating ACMI rates to an uncompetitive level. “With the 2004 to 2007 period, there are not many aircraft out there at the moment,” said George Chisholm, executive director of Texel Air. Texel announced an order for a second 737-800BCF conversion with Boeing during Cargo Facts EMEA and is in the market for a feedstock airframe. “We’d be looking for something around 2004- or 2005-vintage; [that] would be ideal for us,” he said. While lessors may face difficulties placing an aircraft outside the age sweet spot, “there are regions where you can place those,” said Greener. “Slightly younger airframes work if you look at it over a longer period,” said Alastair Willson, managing director of U.K.-based Titan Airways. The carrier has added to its fleet two 2009-vintage A321-200Fs and plans to convert a third 2009-vintage A321-200. Suitable feedstock is about more than just production vintage, however. “Age is one item, but we need to look at the overall maintenance status of the asset,” said Joerg Andriof, SVP and global head of investment at Titan Aviation Leasing. Even some younger frames may be approaching 30,000 cycles or more, making the airframe’s prospects for conversion questionable. Static or rebounding values and increasing competition from part-out companies stand to make the hunt for ideal conversion feedstock even worse. While 737-800 values that were inflated by the MAX impact have led to a 20% to 30% drop in values, “it will not take so much before we probably see current market values increase, because right now, there’s not much demand from part-out companies,” said Andriof. “I believe that soon we will see that part-out companies will become interested in the assets again, and then when we go out and look for feedstock we’ll compete with [them].”

CF EMEA: Optimal conversion feedstock for 737NGs and A321s remains limited

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