Listen: Airbus back in the production freighter game

Airbus announced last week that it has now received board approval to go ahead with the development of an A350 production freighter , but is keeping mum about what exactly the aircraft will offer. For now, all the European planemaker is willing to disclose is that it intends to base the A350F “predominantly” on the A350-1000 and that the payload will be above 90 tonnes. In this episode of “Cargo Facts Connect,” Cargo Facts Consulting Managing Director Frederic Horst looks at what the A350F means for Airbus and discusses the prospects for the freighter in the large widebody segment. A transcript is available below. This transcript has been generated by software and is being presented as is. Some transcription errors may remain. Jeff Lee Hello 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 and freight aircraft industries for over 40 years. I'm Jeff Lee, Associate Editor of cargo facts. Thanks as always, to our sponsors. We're now into August and it's Monday the second joining us today we have Frederic Horst, Managing Director of cargo facts consulting. Hello, Frederic. Frederic Horst morning, afternoon Jeff Lee So Airbus made the a 350 freighter official last week. But we don't actually know that much about it strangely. What did you make of this announcement generally? And the way they did it? Frederic Horst Yeah, it was a bit. It was a bit light on detail and low on payload, I should, I should say. And, I mean, it's encouraging to see that they're developing, or at least committing to developing a program. So I'm looking forward to seeing some actual specs on the, on the aircraft and see how they match up against our own estimates of what the aircraft can do and can't do. Jeff Lee Right, and they don't have much time actually, to, to build one and, you know, have these things flying if they stick to their plan schedule. But I mean, at this stage, they're really not willing to say anything other than the fact that it will be based more on the only one that the longer 1000. And they will have a payload of 90 plus tons. So I mean, we can kind of read between the lines on what might that mean for for this freighter? Frederic Horst Yeah, it seems to me like a triple seven 300er SF with less payload than a triple seven 300 ar SF, so they they're gonna have a hard time gaining traction in that particular in that particular market, especially considering that the triple seven 300 arsf itself is is an aircraft that works okay in in Express and ecommerce type networks, but, but less so in general cargo networks, just because it doesn't have the density capabilities that the triple seven 200 has the cheapest simple seven 402 7478 in that category, and even the MD 11 for that matter is is also an aircraft that is that is built for build for general cargo densities, and not for Express density. Jeff Lee Yes, I mean, I'm, what do you think, the intending to do with this aircraft? I mean, what what potential Do you see for this? If it's based on, you know, the information that we have on these specs? What potential does it have? And, you know, how, how much demand will there be for for an Airbus next generation freighter? Frederic Horst Well, overall, in this in this segment over the next 20 years, we're forecasting demand for about 770 fleet additions and some of those roughly half half or older aircraft that have been retired. So, me lemons and all the seven four sevens primarily in that segment and the remainder would be would be growth. The thing is in that segment is the 50 plus percent of the aircraft of the 650 or so aircraft that are in that segment right now are actually operated by combination carriers and all cargo carriers wanting to continental routes and the remainder Express carriers like FedEx and UPS and aircraft operating on behalf of DHL or different contract employees that are that are in there, the medium wide body and the narrow body segment is very different than pretty much the entire amount of capacity that in those segments is operated by or on behalf of Express companies and a bit of e commerce they thrown in as well. The thing is generally on in the old cargo and an international air freight space, the densities are much higher than they are in the Express business and that doesn't make it triple seven 300 or 350 1000. particularly attractive. For for all cargo operators in there. I mean the triple seven 200 really is the ideal area. Actually, the ideal aircraft is the 7478. But, you know, that's going to have its sunset date next year. And that's, that's for another discussion of a, you know, you know how I feel about the cancellation of that program? Jeff Lee Yeah, I mean, or maybe, maybe Airbus is just kind of holding back, and maybe it will be closer to 100 tons. But I mean, even then, it's still not into the triple seven freighter that competitive high density bracket. Frederic Horst No, I mean, you know, just looking at the specs of the aircraft, as a passenger aircraft, I think they'd be hard pressed to get 100 tons out of out of that plane, our own estimate for the for the a 350. For the a 350 1000 was about 95 tons and for the a 350 900. About 85 tons. Price. So the a 350 900 is about the same volume as a as a triple seven 200. But with that kind of payload, you're looking at pretty much a 20 time difference in terms of carrying capability in those aircraft. And one thing that we, that I that I do look like to look at is the operating mt way to maximum takeoff weight ratio, and for the triple seven 200 freighter is 8.44. The a 350 actually both for 901,000. It's Oh point five, which means there's a lot more operating mtoui in that aircraft, relative to the its weight carrying capabilities. And I think that, you know, when we start to think about Boeing aircraft, I think the triple seven nine would come out similar with a triple Seven, eight, I don't know, I think the triple seven eight would make a good replacement for the triple seven 200. freighter if if we couldn't carry a similar amount of weight, I mean, you'd be getting an extra two positions on that aircraft compared to a triple seven 200. So that would be that would be nice to have. Jeff Lee Yeah. And what about in terms of potential customers? Who do you see being likely candidates to order the sb 50? freezer? Well, we Frederic Horst can only speculate. I mean, we know they've been talking with everyone out in the market. But I mean, if we look at the Yeah, first of all, when we look at the world, trade of flee, roughly two thirds of the world freighter fleet are operating for DHL, FedEx, and ups. So FedEx, I think, with its continued commitment, and backlog to the triple seven 200 would fall flat, but be wrong. DHL, also strong commitment to a triple seven 200 platform at the moment, as well as a lot of other types. Of course, you'd end up seeing a few a 350s in the network, because you pretty much see every plane and then work ups better? That's a question, of course. I mean, they're obviously strongly committed to a 7478. But there's not much of a backlog left for that. You know, what's going to be the MD 11 replacement for for ups in the network? Could it be an A 350? Could it be an A 330? as well, I mean, the a 330 300 has a similar volume to what an MD 11 offers. So there's a big question mark around the three biggest customers. And Pangea. Yeah. Where does where does that leave us? I think it's telling that Airbus didn't actually announce the launch customer together with launching the program. And it's also telling that they provided very little in terms of terms of detail the aircraft could do. Jeff Lee Yeah, I mean, that's why I kind of feel like it wasn't a real launch, as it were, they were kind of just announcing this, letting them know that they're officially going ahead with it. But they were announcing that the announcement right. When they actually do land a launch customer, then they will I guess they'll have a bigger announcement and officially launch the program. Maybe I think, but obviously Yeah, I mean, we there are a lot of combination areas that are Airbus operators. And I guess that is a potential way for Airbus to enter the freedom market again, having not built a commercial freighter it for several years at least. Frederic Horst But no successful commercial freight or even longer. Jeff Lee Right But, I mean, how important do you think it was for Airbus to kind of send this message to the market? And kind of come up with the, with this next gen freighter before Boeing? Frederic Horst Well, I'm glad they finally did it. I should have done it a few years ago. I mean, the The problem is really that both manufacturers have been sitting on their hands with regard to announcing afraid so if any good comes about comes with it, it might pause buying to make a move on what's the next generation freighter going to be because it's a segment in the market where there there are a lot of question marks around it, you know, there is demand from from World Trade and international commerce. But at the moment, there's only one production freighter program that's still active. And that's the triple seven 200. And no conversion program that will be active until II, the eye program receives and certification next year or the year after, whenever that will end up being so we're facing a real capacity crunch long term, not not just a short term capacity crunch, because of COVID, but also long term capacity crunch in their financing thing. So it's important that we do see some manufacturers step up to the plate and and actually come up with a with a freight and product that makes sense. The only problem is what I'm seeing right now is all the new freight or products that have been put up on the market are actually substandard compared to compared to what's on offer at the moment. p2f, seven four seven, eight. Jeff Lee I think that ship has sailed. But I mean, there is I guess there is that deadline, the 2028 deadline. So, I mean, yeah, that will have to be at least one new build freezer that couldn't afford complies with those requirements. But an Airbus is clearly thinking that, you know, with replacements and new orders, you know, there has to be there is a position in the market for Airbus to occupy. But Boeing, on the other hand, we think we can safely assume that they've already kind of been working behind the scenes on on the triple 7x freighter, and they just haven't announced it publicly. But they they will at some point. And I mean, with the triple 7x frita. I mean, we can can we say that it will be targeted at that high density segment and to replace the the current triple seven, bracelet or be better than the current triple seven praiser? Frederic Horst It depends which one they choose, if they go for a triple seven, nine, then you're going to have a bloodbath involving the the triple seven 300 conversion, the VA 350 1000 and 100, triple seven, nine I think that triple seven eight would definitely make the better freighter if it actually can offer payload performance. That's, that's that's at least similar, if not superior to the to this triple seven 200 which offers a 105 ton payload on a on an aircraft, which retails for 27 positions on the main deck, triple seven paid offer two extra positions on the main deck. So it'd be nice growth aircraft from from that. Jeff Lee Yeah, I mean, in a way Airbus was had to choose between going up against that. The high density triple 7x freighter and the lower density, triple seven 300 yard conversion, right. Frederic Horst Yeah. I think if that if, you know, if you've if you're faced with two bad choices like that, then then ultimately I think they they made the right choice, particularly considering that an A 350 900 is, yeah have the same volume as a triple seven 200 half spec but its capabilities are by far inferior to what a triple seven 200 f could do. And it can I guess the thing that we need to understand in the in the longhole large wide body freighter space, there is a tendency for for companies to go factory build freighters rather than conversions. Just because utilization is higher dispatch required requirements are higher fuel burn is a is a much more important chair overall, as well. So I mean, if we were looking around forecasting that segment of the 770 aircraft that are going to be added in there, we actually predict that about 80% are actually going to be production Friday. In the remainder, we're going to be conversions. But ultimately it depends what's available in the market, right? If there's only conversions available in the market, well, conversions are going to kick the market. If there's a viable production freighter program that's priced accordingly. And that's that's going to be the big question mark, as well as how is a boss going to price in a 350 to make it competitive with a with a triple seven 300, that when you're looking at conversion cost on a triple seven 330 35 million, and then whatever the feedstock cost is, obviously, we're in distressed asset territory with the triple seven 300. But we still might be looking at a 6065, maybe even $70 million build cost on the on the aircraft, so it's going to be have to be priced pretty aggressively to make sense. Probably in round, I would say 110 120. Mark. And that's asking a lot. Jeff Lee Well, I mean, yeah, it's obviously but I guess, I mean, I'm glad that they find any odd going ahead with it. And I think Boeing has, Boeing has a lot on its plate right now and probably was a good time for Airbus to, to come in. Frederic Horst Well, it's not an interesting the price and market and the moment, but the other thing we have to remember is that, you know, things may be maybe booming right now and any monkey with a freighter can can make money. But ultimately, when you're committing to a large, wide body assets, you need to take a 510 15 year view one on what you're doing as an as an operator, obviously, as a manufacturer even longer. And that's, you know, it's hard. It's hard for a company to make the make the plunge. Jeff Lee Yeah. But we will Yeah, I guess we'll see. We can't wait to hear more about the 350 freighter. Yeah, for now, we we officially have an Airbus next generation freighter program. Frederic Horst So the next step is to give us some specs and then we can then we can have a more more intelligent discussion about you know, how it would compare to to a triple seven to a seven four seven to other aircraft, you know, out there and whether whether we'll find its rightful place or whether we'll go the same direction as the a 380 freighter did Jeff Lee the a 330 200 freigher in that way, a little bit further than the 380 but let's hope the 350 goes much further than that. But thanks for your time and thank you for tuning in to this episode of cargofacts Connect for more multimedia content like this check out cargofacts.com and search cargofacts connect on iTunes and Spotify. Join us again next time and I hope to see you soon Frederic. Subscribe to Cargo Facts Connect on iTunes or Spotify , or download the episode on Transistor . Cargo Facts Symposium, taking place LIVE October 25-27 at the Wynn Las Vegas, is the essential event for stakeholders in the air cargo industry. Learn more and register at www.cargofactssymposium.com .

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