Weekly Wrap: Flurry of freighter orders in first weeks of 2021

The first two weeks of January proved to be an active period for production freighter orders , with Atlas Air Worldwide Holdings and DHL Express both announcing new deals with Boeing . Each 747-8F Boeing expects to deliver between now and when production ends in 2022 is now accounted for as Atlas Air ordered the final aircraft Boeing will assemble based on the kits and components it has. Meanwhile, Canada has emerged as a promising market for widebody freighter growth over the next two years. Air Canada formally enter ed into a sale-leaseback deal with Cargo Aircraft Management for two 767-300ER s to be converted into freighter configuration and plans to begin operating the type in 2021. Cargojet , Canada’s largest freighter operator , also revealed the terms of an equity offering that will allow it to add to its fleet fi ve 767Fs as well as a new platform for the carrier, the 777F. In this Cargo Facts Connect episode, Senior Editor Charles Kauffman and Associate Editor Jeff Lee reflect on freighter news from this week and look ahead to what is in store for next week. A transcript is available below. This transcript has been generated by software and is being presented as is. Some transcription errors may remain. Charles Kauffman Hello everyone and welcome to this episode of Cargo Facts Connect, the podcast and video series of Cargo Facts, the newsletter of record of the air cargo and freighter aircraft industries for over 40 years. I'm Charles Kauffman, Senior Editor of Cargo Facts. Jeff Lee I'm Jeff Lee, associate editor of Cargo Facts. Charles Kauffman This is the weekly wrap for the week of January 11 2021, the first weekly wrap of the new year. So Happy New Year to all of our listeners. Now before we begin, I'd like to thank our Cargo Facts subscribers, and our sponsors, which include 321 Precision Conversions, ACI Aero Capital, AEI, Baltic Exchange, Innovative Solutions & Support and Rostrum Leasing. If you're not already subscribed, we invite you to start your free trial today at Cargofacts.com. Now, as is typical for this time of year, we often find ourselves reflecting on freighter orders logged during the previous year. Our January feature was no different. And it looks at what was a relatively quiet year for production freighter orders, particularly because of the fewer options available. Jeff, what can What can you tell us about that production freighter orders in 2020. Jeff Lee So as you said it was a relatively slow year for for Boeing. And they only received orders for a total of 15 freighter aircraft that included three that were previously destined for Volga-Dnepr Group of Russia and then remarketed. Those 15 orders came from five customers. On the deliveries side, they delivered 46 freighter aircraft last year. And come so compared with 2019, Boeing had orders for 28 freighters and 50, delivered 52 freighters. So perhaps, you know, given the strange year that 2020 was perhaps it wasn't too surprising, but the performance last year was was below that of the year before but the deliveries actually wasn't. That wasn't too bad compared to 2019. And that was still above the the five year average. So and now that we're in 2021, which is in the second week, but we've already seen quite a bit of activity on the production side. First we add Airbus in Airbus says official numbers. It turns out that turkeys MNG Airlines actually canceled the remaining orders for three A330-200Fs in December. That order actually had been stagnant for a few years. And we know that the airline is war they have been looking at conversions. So overall, the A330-200F program it's very possible that that program will stay at just 30 units built and delivered and willing to Boeing we now know that the final 747-8Fs will be going to Atlas air. And that was good news. But was it that much of a surprise. Charles Kauffman I mean, certainly it's it's it is big news for for Atlas for Boeing the the net order totals really did not change at all. So we've known that with production ending in 2022. There would be a fixed number of 747-8 freighters rolling off the assembly line, most of which are going to UPS. Now the opportunity for for Atlas to purchase these four units really is a result of what had been in dispute between Boeing and the Volga-Dnepr Group in early 2020. Of course, looking back to last year, the air freight market dynamics were quite different. And Volga-Dnepr was unable to take delivery of one of five 747-8Fs on order and essentially declared force majure on on the remaining orders. According to its contractual greement with Boeing after failing to take delivery of the aircraft, Boeing was able to start remarketing to seven four sevens and and that is what we are essentially seeing with this this Atlas order. So, that will mean the final 747 dash eights will be delivered to to UPS and Atlas, you know in terms of is it surprising that Atlas took took these final airframes probably, uh, you know, certainly not they are the largest operator of the 747-8 platform. I can imagine that Boeing was in talks with a number of 747 dash eight operators and again, these these aircraft will go to two two outlets. Now that that wasn't the only quarter that was logged or announced formally this this past week. We also saw a top order triple seven freighter order from DHL Express. Jeff, you've you've reported on this extensively over the past year since since DHL first ordered triple sevens from Boeing. How is this quarter potentially meaningful for a CMI operators? Jeff Lee Well we firstly we know for a fact that many of DHL airplanes on operated by DHL itself. And for example, with the triple sevens they have 10 at the moment, and four more to go this year before the this new order starts coming in, in 2022. But the 777Fs right now operated by AeroLogic in Germany and in the US by Kalitta and Southern Air. So, with DHL, generally we're seeing a shift to more owned aircraft, as opposed to aircraft operated by CMI operators. And that's true for both narrowbodies and widebodies. But this means that there are communities for for CMI operators to fly these triple sevens. But what I would expect probably these aircraft will be going to southern, Kalitta or AeroLogic so we probably wouldn't see unusual seven operators for DHL, but who knows? They do like to spread the aircraft among different carriers. Charles Kauffman Yeah, I wouldn't rule it out completely at this point but seems like there is capacity for Jeff Lee and the other thing is actually the using Yeah, with the CMIoperators, actually, that we've seen not just DHL with FedEx and UPS. Over the past couple months, they've had a lot of capacity being operated by a CMI operators, especially this peak, and with the shift to more owned aircraft that could potentially result in less flying less ECM like MST, but we'll have to see, I guess. Charles Kauffman Yeah, and moving away from production freighter orders. We've seen quite a bit of new activity from a couple of Canadian operators this week that do do to some extent signaled the growth of the freighter fleet that is based in Canada. Can you walk us through these these two orders? Sure. Jeff Lee So firstly, we have Air Canada, which signaled last towards the end of last year that they were going to get into the freedom market. And so now they have a deal with cargo aircraft management for what a sale leaseback arrangement for two 767-300 freighters that will be converted that will be converted to freighters by IAI with ATSG overseeing that process. And they expect to have those by the end of this year. And separately cargo jet has raised money for and they would be using part of that money for five 767 freighters and two 777 freighters in the next two to three years based on international growth but that raises a few questions. And, you know, one of that one of those questions is what's that? Where's that growth coming from? Or you know, what's it being driven by Is it the network or is it you know, coming from from companies like Amazon in DHL. We know cargo jet has a nice operating flights for both Amazon and DHL. So and the other question is with the seventh through the triple sevens, particularly which, which variant of the triple seven? I'll be referring to we don't know yet. Charles Kauffman That's it. That's a great question. One that is fun to mull over, you know, the, the equity offering is set to close next month. So, I'm sure after that closes, we'll, we'll start to have a better idea of you know, more concretely where some of this equity is going to flow. But now with the estimate of 350 million Canadian seems pretty safe to say that these are these do not reflect a new order directly with with Boeing for factory built freighters. Instead, these are likely going to be either used triple seven freighters or possibly conversions. You're looking at the 777 freighter program. We are starting to see some of the aircraft that were delivered early on in the program they're starting to come off lease last year, Emirates returned 777f to DAE Capital that is now with with Kalitta Air we've also seen carriers re reevaluate their, their their fleet needs for the large wide body segment. That's a hot as you reported last week, sold one of its triple seven freighters to FedEx you know from what we see there, there is not an abundance of triple sevens coming off lease, either around 2023. But there there are a few options and two is not out of the question. Also around that time or expecting II to begin delivering its first triple seven 300 ers s the freighter converted variant. Now again, their their estimates are 2023. The program does not yet have an STC. And you know how quickly I was able to start redelivering triple seven traders is still unclear at this point. But around 2023 is not out of the question. And cargo jet could be among the first operators to take delivery of that airframe. So quite an inactive first couple of weeks of January. Not often what we expect. What's on tap for for next week. Is this going to continue? Jeff Lee So just to go back to the Emirates 777. That was 2019. That wasn't I know, it still feels like we're in 2020. But that was 2019 Charles Kauffman Thanks for Thanks for pointing that out. I 2020 Square already. Jeff Lee Yeah, now. So next week, we'll be taking a look at the Brazilian market. We've seen quite a bit of growth in terms of news freight operators. So it's pretty exciting. And we'll also be revisiting the subject of passenger-freighters, because that's still going on. And you know, we're looking at the regulatory environment for these operations and how that might change, you know, as we progress through the year. Charles Kauffman All right. I'm looking forward to it. And fortunately, that's all for today. To those of you listening. Thank you for joining us on this episode of Cargo Facts Connect with the latest on all things freighters and freighter conversions, visit www.cargofacts.com

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