GECAS will double its 737-800 freighter conversion orders

Following yesterday’s announcement of a four-unit 737-800BCF lease order from the West Atlantic Group, GECAS today said it planned to more than double its orders for 737-800 passenger-to-freighter conversions, adding thirty more to the twenty-five it has already ordered from Aeronautical Engineers, Inc (AEI) and Boeing.

We’ll start with some history:

GECAS was the launch customer for AEI’s 737-800 P-to-F program, placing an order for “up to twenty” 737-800 conversions in June 2015. GECAS ferried the first aircraft (29121, off lease from Corendon Airlines) to the Commercial Jet facility in Miami in May, 2016. Five months later, Ireland-based ASL Aviation Group agreed to lease two AEI-converted 737-800s from GECAS.

GECAS was also a launch customer, with a five-conversion order, for Boeing’s 737-800BCF program when it was announced in February 2016. As it did for AEI’s program, GECAS provided the prototype aircraft for Boeing. As mentioned above, Sweden-based West Atlantic yesterday agreed to lease four of the Boeing-converted freighters. Both AEI and Boeing have said they expect certification of their respective 737-800 P-to-F programs in 2018.

Returning to the latest announcement, and assuming that GECAS will take up all twenty of the “up to twenty” conversions it ordered from AEI, this brings the total number 737-800s GECAS plans to convert to freighter configuration to fifty-five.

Not a small number. But, considering that GECAS has over 280 737-800s in its fleet, and that the market for narrowbody freighters is likely to remain strong for some time, perhaps not an unreasonable number.

Missing from the announcement was any mention of which conversion house would perform these thirty conversions. At present, there are three options: AEI and Boeing (as discussed above), and also Bedek Aviation Group. A fourth – PEMCO World Air Services – may become available, as PEMCO recently launched a 737-700 P-to-F program and we would not be surprised if an -800 program was in the cards at some point  in the future.

Stepping back from GECAS and the 737-800, we conclude with an overview of the state of the narrowbody conversion landscape. The top chart shows the programs for all narrowbody jet aircraft currently on offer, while the bottom chart shows announced orders for the new 737NG and A320 Family programs.

Leaving aside the 737 Classic conversion programs, and those for the CRJ200 and MD80, and looking only at the programs for the new types, several things jump out of the charts. First, while there are three competing programs for the 737-800, and two for the 737-700, only EFW has formally launched an A320/A321 Family conversion program. US-based PacAvi was in the game 2015/2016, but withdrew at the beginning of this year when its funding ran out. We know that several other players are seriously contemplating entering the A320/A321 conversion arena, and would be surprised if one or two of them launched in the near future, but for now, EFW has the field to itself.

Which brings us to the second point: Of the 136 firm orders for freighter conversion of these new types, all but five are for the 737-800. And those remaining five are for the 737-700 (the two orders with PEMCO are for a combi conversion). There are so far no announced orders for either an A320 or an A321 conversion. Given our belief that the A321 will be an excellent freighter, we expect this to change, but for the moment, all attention is focused on the 737-800.

If you are interested in an in-depth look at the narrowbody freighter market, join us at the Cargo Facts Symposium in Miami, 2 – 4 October, where senior executives from the major conversion houses will participate in a session titled: “Narrowbody Freighter Conversions – New Programs, New Questions. To register, or for more information, go to CargoFactsSymposium.com.