Cargo Aircraft Management (CAM), the leasing affiliate of Air Transport Services Group (ATSG), has agreed to acquire from Jetran twenty 767-300ERs slated to come out of passenger service with American Airlines over the next three years. As ATSG continues to secure conversion feedstock, the company is well positioned to supply the express industry’s seemingly incessant demand for the medium-widebody freighter.
Although nowadays freighter-converted 767s are most visibly associated with Amazon Air, there are a number of other players in the market vying for a limited number of 767 conversion feedstock. Express carriers like SF Airlines and UPS Airlines, as well as carriers operating on behalf of global integrators – such as CargoJet and Kalitta Air – have all been in the market for 767 feedstock for conversions within the past year. Few companies however, were in a position to take the 20-aircraft portfolio as ATSG has done.
The majority of this batch of feedstock will be converted to freighter configuration and leased to carriers through CAM. “ATSG currently expects to begin freighter modification of six of the twenty 767-300s during 2019, up to nine during 2020, and no fewer than five in 2021,” according to an ATSG release.” CAM may also choose to refurbish some of the 767s, and lease them internally to Omni Air, ahead of conversion to freighter configuration. Based on the age of the aircraft coming out of service with American Airlines, however, Cargo Facts believes this is unlikely on a large scale. Omni’s 767 fleet is relatively young, with the oldest airframe having rolled off the assembly line less than a decade ago. American Airlines’ 767-300ERs in contrast, range in age from fifteen to twenty-five years.
Looking ahead to conversions and placements next year, in its 3Q earnings call last month, ATSG said it expected to place between eight and ten 767-300Fs in service during 2019 and that it was close to securing agreements for five 767 aircraft. Two units are already undergoing conversion by Bedek in Tel Aviv. It remains to be seen whether ATSG will raise its forecast for 2019 placements after securing the American Airlines feedstock, or if those aircraft were already factored into the estimate. ATSG did not name a conversion house, but Bedek has historically completed most of ATSG’s conversions. This month, Bedek redelivered the 70th freighter-converted aircraft to ATSG.
Returning to the twenty aircraft deal, and where the aircraft may end up following conversion, many signs point to Amazon Air – but Cargo Facts believes ATSG would be interested in the American Airlines feedstock regardless of whether or not Amazon was intent on expanding the portfolio of freighters it leases beyond forty units. Recent Cargo Facts analysis suggests that additional maintenance spares reserved for Amazon operations are likely being pressed into service as peak season shipping demand requires additional capacity.
It has also been widely reported that Amazon has an RFP out for six additional 767s. It is also important to note that twelve of the aircraft Amazon dry-leases from CAM are the older 767F-200BDSF variant, and will need to be replaced ahead of the 767-300BDSFs just to maintain a twenty-unit fleet for Amazon.
Even if the converted freighters do not end up operating in Amazon Air’s network, ATSG is unlikely to have trouble finding a home for the 767Fs. ATSG’s customers have indicated a high level of interest in operating the medium widebodies – just over a month ago, Polish carrier SkyTaxi took delivery of its first 767-200F from CAM, which is also the first widebody freighter based in Poland, and earlier this year, Air Incheon began operating a 767-300BDSF on lease from ATSG West Leasing.
Those interested in learning more about passenger-to-freighter aircraft conversions are invited to join us Cargo Facts EMEA, to be held 4-6 February at The Westin Grand Frankfurt. To register or for more information, visit www.cargofactsemea.com.