PODCAST: 100th episode special

Andrew Crider
Hello and welcome to this episode of cargo facts connect the podcast of cargo facts, the newsletter of record for the air cargo and freighter aircraft industries for over 40 years. I’m your host Andrew Crider, associate editor of Cargo Facts.

Robert Luke
And I am your co host, Associate Editor Robert luke of cargo facts.

Jeff Lee
And I’m Jeff Lee, editor of cargo facts

Robert Luke
before we begin, happy birthday once again.

Jeff Lee
Happy birthday, Andrew.

Robert Luke
We couldn’t be without you, man.

Andrew Crider
You’re Thank you very much.

Robert Luke
You’re an important part to our team. Thank you for sticking it out and making us look very good on these podcasts on a weekly basis, my man.

Andrew Crider
It is my it’s my pleasure. And thank you so much for that Robert and Jeff. I wanted to begin today with a special note to thank all of our listeners. This is our 100th episode of cargo facts connect podcast. I know, behalf of all the podcast crew, you have a choice in podcasts and I’d like to thank you for choosing us. Which puts us to E F. W. Robert, do you have news on a conversion milestone from from the Rhine River Elbe Excuse me? Elbe or? Jeff correct me on?

Jeff Lee
Yes, yes, Elbe.

Robert Luke
Yes, workflows from the river Elbe. Thank you, Andrew. They definitely accomplished a milestone this week by Re delivering their 50th Next Generation Airbus freighter with a combination of all of the different new next generation prototypes to a 332 a 320 and a 321. I believe that that is not just only a significant milestone, but it’s a notable one as you know, Airbus is still you know, entering the market from a perspective on the next generation of freight is coming in. And of course, Boeing has been known for having such a solid presence in that air cargo sector for many years. We then turn around and be able to have such a rapid growth that accomplishment in such a short time span is remarkable. So we tip our hats off to the entire EFW crew Wolfgang, you owe me a band performance next time I see you at the next conference. I want to see you pluck those guitar strings buddy. But that being said, the aircraft that became the fifth the F three delivery was indeed the 2012 Vintage a 330 300 P two F 135 7 ex Avianca that was converted at the Dresden facility and will be going to DHL Express, who in turn will be CMI through air Hong Kong as it continues to expand its operational presence with newer modernized freighters for the Express company’s purposes here as they continue to remain competitive in that environment. I do believe that you know and total we have seen are approximately 17 A 330 300 P two F’s nine a 330 200 Pts and 24, a 321 200 pts and a 320 200 p2fs that have culminated to the total of 50 re deliveries for the STC holder. Jeff, do you want to share any more more detailed insight into this as we continue to move forward? Or do we want to continue just with a nice congratulation?

Jeff Lee
Well, I did want to say that it’s perhaps fitting that this milestone was with DHL, and kind of reminds us of Boeing 737 800 BCF milestone that they achieved with aercap. But on this on the A330 conversions on Airbus and New Generation Next Generation Airbus conversions. Yeah, they, they’ve they’ve been, it hasn’t been the the, the timeline actually isn’t that short. But now that they’ve achieved this, this milestone, they obviously will continue to ramp up their capacity and conversion rates. And hopefully, we’ll see when they reached the 100 mark, and it will definitely take less time than they did to reach that 50 mark. But beyond just EFw I mean, there are obviously various companies converting Airbus aircraft. And so we will see apart from the EFw conversions, we’ll see more and more Airbus freighters entering the market. And that’s leaving aside the a 350, which, of course will be coming in the next few years. So it’s Yeah, I mean, as we’ve kind of said before, the pendulum is shifting slightly toward the Airbus side, whether that’s narrow bodies or white bodies, but it’s no, it’s an interesting time and where you will see, there are a few other programs that will hopefully get certified in. In the next couple of years.

Andrew Crider
you had spoken mostly about the Airbus platform that you had quickly mentioned the BCF, which leads me to ask you about one of the other stories. There was a new airline in Turkey uls cargo and they took on the 737 800. This week was it was that BCF as well.

Jeff Lee
So not the new airline, but new to Boeing. They have three a 310s right now. And this is rather took me by surprise because they had been talking about continuing their growth with Airbus’s both wide bodies and narrow bodies. So they’ve been looking at the 321 as well as the 330. But of course, issues with getting secure in conversion slots that kind of hindered their plans. And so they they have now basically turn to to the Boeing 737 800. And yes, these will be a BCF conversions. And they have now signed a deal for wo?

Andrew Crider
Well, that’s incredibly interesting. You say that they had turned to Boeing because of problems getting conversion slots. That’s that’s a huge news and tell me how the 737 800 compares to the A 310.

Jeff Lee
Although it doesn’t really compare, does it? I mean, they I think these will, they will definitely won’t replace the 310. Does that mean they will continue to operate those and they’ve largely operated on an easier my bases for Turkish Airlines. Now, the seven, three sevens are possible probably enable them to launch different routes. And we will have to see whether those end up flying for Turkish. Really not sure on that right now. But the that first one will be coming in the latter part of this year. And yeah, so it’ll be interesting and these will be from aercap. We were talking about aircraft. Earlier, of course, one of the largest 737 BCF 800 BCF conversion customers. So yeah, new customer for AerCap. New operator for the 737 800 freighter platform, and first 737 800 freighter for turkey. So a lot of different milestones.

Andrew Crider
That that’s a number of milestones. I have to say that I wouldn’t be an expert on the Turkish Air Cargo beat. Do you think the 737 would blend more seamlessly with that pasture airlines existing pasture?

Jeff Lee
Well, it’s interesting because Turkish Airlines is a huge operator of both Airbus and Boeing narrowbodies so I either type has potential to fit in terms of just the operational and infrastructure and it is interesting for ULS meanwhile it I do wonder what they will how they’re going to deal with the pilot training and all that given that everything they’ve built has been around the the Airbus platform but I mean that’s that’s something that operators will will have to address at some point one way or another. So they will they’ve clearly made made or will make the necessary preparations for for that entry of that platform.

Robert Luke
Yeah, you uls it’s been primarily a wide body operator, medium wide body for the most part with the introduction of this.

Jeff Lee
They haven’t operated narrow bodies before so they they were solely wide bodies, but yeah, I mean, this is their entry into the narrow body market. And it’s they’re not The only ones to enter the narrowbodies space. In fact, we’ve seen We’ve seen a number of other airlines entering then narrowbody, freighter segment whether that’s from airlines, that had no freighter presence at all before or airlines that did, but only in the widebodies space. So it’s a lot of those companies are doing this with the 737 800. But equally we have we’ve seen that with a 321s, as well. So it’s I mean, it just speaks to the the utility and the potential, I guess, of these latest generation narrowbody conversions despite, you know, the sentiment in the market, that there might be a bit of a not bubble, but, you know, an overcapacity or a slight course correction. But I think the fact that we are seeing all these new players is kind of a counterpoint. And related to this is what George Dimitroff at cirium said at cargo facts LATAM about 737 800, freighter lease rates coming down. And I believe that this is, this might be, you know, a very good example of that. And we’ll continue to see new players been more drawn to deals like this to lease the type with those lease rates coming down.

Robert Luke
Very interesting. Indeed.

Andrew Crider
Robert, you had written, to jump, something completely different, but something that I think is very interesting. There was a number of retirements in May, you wrote seven MD 11Fs, who is retiring those?

Robert Luke
I’m trying not to cry, but this use was beautiful what you’re happy birthday, but they’re retired MD elevens. in it. It’s so sad to see these aircraft which held the market down and maintain the the identity of air cargo movement on the wide body sector law with the 740 sevens reached that point where their service is now becoming obsolete. I won’t say it’s firmly obsolete. There are some different perspectives we have to look at here. FedEx and UPS are the primary operators that moved seven of the MD 11 freighter types out to Victorville recently, but it’s not a permanent retirement, personally, as FedEx did indicate this is just to maximize efficiency and reduce operational costs and overhead, which makes sense, you’ve got a three engine powered aircraft that’s, you know, got some age to it. So obviously, there’s a lot of overhead that comes with that as well as fuel burn rates that are a little higher than some of the twin engine wind bodies that are servicing the market, similar market segments now. So we do have to recognize that they can return but FedEx has for the past year, and even prior to that been more focused on the strategy of being frugal and economical with their operations. And they’ve launched plenty initiatives in had earnings calls that have substantiated as much as they continue to streamline and figure out ways to address the downturn in the downturn in the demand for air cargo, since we’re kind of in the the posts phase of the pandemic and things are starting to return to normal. So they’ve been proactive. UPS also did acknowledge that they were going to retire the MD 11 fleet and has sent one of these six, one of these seven aircraft excuse me that were recently sent out to Victorville to be parked don’t want to say that it’s temporary, because they did indicate when they send their aircraft out, they weren’t going to be retiring them. That was the most recent information that cargo facts was able to receive from UPS. So it said away but at the same time, as Jeff mentioned, with the OLS in the mentoring the narrowbody space, carriers are looking for modes of delivery that are more efficient, where there’s a lower operational costs and some of these variants that are entering the market have capabilities to do some of the things the traditional freighters are were capable of doing but at a smaller rate, but a quicker and more efficient pace. So while we will truly miss the MD elevens we can’t say that they’re officially gone. They’re still some that are flying but you know, it was just kind of notable to see that so many of these aircraft were immediately parked, but FedEx and UPS did indicate that they were going to be moving these out of their fleet service. And they had also indicated that there were certain numbers that they were looking to retire by the end of the year, and so far FedEx is part 13 of them today, and UPS indicated, as I said earlier, that they will start retiring their fleet and, you know, they expect to retire 6 By the end of the year. So, again, rational carrier, MD 11 is a finally found its purpose in in the airspace serving as a freighter versus probably the role of a passenger is definitely witnessed more success as an air cargo provider. And it’s definitely at a point where the retirement decision has been made by the two, the two biggest Express companies in the United States, and they’re making that move to transition out of them. So,

Andrew Crider
Robert, you reported that the retirements that you that are occurring this summer are 1990s vintage, now the MD 11 is not say that similar to the 737 Classic, because there’s so many classics, and there’s so many more seven, three sevens that still use same technology. So maintenance cost is far less, but it’s still only 99. These these aircraft would, by age alones seem to have plenty of life in need, you know, if they still have cycles left on the clock, or if anyone would be interested in purchasing them?

Robert Luke
I do believe that there’s going to be a viable market for them in the secondary market. To answer your question about the green time on the airframe and engines. You know, these aircraft were designed to have 150,000 flight hours or 40,000 cycles, according to Boeing, which published that information in aero magazine in 2012. You know, again, looking at what what the aircraft is up against, you know, the twin engine is the more popular freighter variant these days and forgot for obvious reasons. And it brings uniformity, bringing simplicity, it kind of narrows down the type of engines that airlines have to keep in their stock and inventory and have to overhaul the LLP packages and all that good stuff to have the best green time remaining on their engines to facilitate the best use of the aircraft that they have. So you know, of course, we could say they’re still very young aircraft. But if you look at the trend that’s happening in the industry right now, what was once considered the average age of 20 are between 20 and 25. To begin converting passenger aircraft or freighters to operate for another 10 to 15 years has actually been cut by at least a minimum of five years now you’re seeing aircraft as young as eight to 10 years old, that are now being converted to free to aircraft and some as old as strict or as young as 15, for that matter, are now being converted. So you’ve seen a change in the industry as far as age requirements, as carriers are looking to try to get younger models where they can get more consistency, more efficiency, more frequency, versus the old aircraft that you probably could fly a limited number of times per month before in order to make it operationally feasible from an expense perspective to validate having a man in your in your fleet.

Andrew Crider
Interesting, well, only time will tell and to speaking of time telling quickly to wrap it up with the both of you. What are some items that you’re looking forward to in the next two weeks?

Jeff Lee
I was actually take that timeline and extend it. With our 100th Episode milestone mind, I’ll just say maybe a couple of the things that we think we expect or hope to happen in the second half of this year. One of those, of course, is the IAI triple seven 300 Ersf. Hopefully, being certified and redelivered. That’s going to be a major event. Speaking of events, of course, our own cargo facts symposium, but what about you, Robert? I’m actually and Andrew. You should chip in as well.

Robert Luke
Yes, Andrew, go ahead. I’ll finish off.

Andrew Crider
I think Elroy’s first flight is going to be significant. That’s a company that has serious backing from the Department of Defense, and their drone is a new, unique caliber, the it’s 200 kilograms, a load, that’s going to be a milestone for the drone industry, as well. I also would hope to hear more developments from UPS flight forward. That’s a company where I know the leadership is is very forward thinking. And I have a lot of confidence in their leadership. And I’m hoping that materializes into something soon.

Robert Luke
Yeah, those are great things I’ll definitely look out for and eagerly anticipate the updates on I think I’m actually interested. Just call me a regional lover just from having the opportunity to work on the aircraft when I was younger, the certification of the Saab 2000. I want to see how that impacts the market and what potential will lie before it and what kind of routes it’s gonna serve. And how many carriers will indeed express a legitimate interest in bringing those into their fleets. I’m also interested in seeing what 2 737 800s Alaska Airlines is going to select to do their conversions with, kudos to them.

Jeff Lee
Actually we know that already.

Robert Luke
We do?

Andrew Crider
I reported on that, buddy.

Robert Luke
Oh, we have the unit numbers. Oops, my bad. Okay. All right. Well, no, I definitely want to see how you know what’s going to happen with the China China Airlines, seven, four sevens, who they’re going to end up with then. I’m definitely tracking the seven fours. I’m a huge fan of that aircraft. And as sad as I was to see the last production model roll off with Atlas earlier this year, as we began the new 2023 year, I want to see how operators planning to extend its life and to continue defining the role of that quadrate freighter which so richly deserves to continue lighting the tires with some of that. Kerosene, jet fuel fire. Ah, there we go.

Jeff Lee
Not to spoil this the story, but we we are looking into those and we might have something like that pretty soon.

Robert Luke
Yes. Well, I’m definitely anxious to find out what’s going to happen with those and can’t wait to get the confirmation of where they’re going. So, yeah, I’m excited. I think we’re in a different space here. And I’m looking forward to seeing how all of this plays out. Because, you know, the market is kind of in a, I won’t say in limbo, but it’s kind of like defining what its new altitude is gonna look like and I’m anxious to see where it levels off at. So good times.

Andrew Crider
And on that. That’s going to be all the time we have for today. For more multimedia coverage like this search cargo facts connect on iTunes and Spotify and search cargofacts.com. Thank you very much for tuning in. And join us again next time.