Cargo Facts Asia: Amid conversion line scarcity, STC holders and MROs add capacity with caution

The variable that will determine the number of converted freighters redelivered in the next few years will not be feedstock availability or customer demand, but rather the number of conversion lines available to satisfy surging demand for freighter conversions brought about by the pandemic, according to speakers on an MRO panel earlier this week at Cargo Facts Asia . [caption id="attachment_415776" align="alignright" width="590"] Panelists from GAMECO, IAI and ST Engineering on a virtual roundtable session at Cargo Facts Asia 2021.[/caption] With “peak” freighter conversion surge expected during the next two years, STC holders must work with their partner MROs to scale up conversion capacity while the market is hot, yet still prepare for the inevitable flattening of demand in a few years’ time. Conversion slots are sold out through 2022 or later for multiple platforms , including 767 conversions from Boeing and Israel Aerospace Industries (IAI), A321-200 and A330-family conversions from Elbe Flugzeugwerke (EFW), and 737-800s from Boeing and other STC holders. Adding or idling a conversion line is a timely process that requires lengthy lead times to ramp up and train teams and allocate space and tools within a hanger. “We are not running to open up more and more conversion lines based on the big demand that we have right now,” said Rafi Matalon, VP and general manager of marketing at IAI-Aviation Group, which actively converts 737NGs, 767-300s and has a 777-300ER passenger-to-freighter conversion program in development. Matalon expects its standing conversion lines will be able to accommodate future demand after one or two years of the “peak” surge that the market is currently experiencing. “We prefer to increase the lines at our existing sites, because we have already have the infrastructure…and our team can supervise two or three or four lines.” ST Engineering holds STCs for the 757-200, A321-200 and A330-family conversions, either directly or through its joint venture with Airbus, EFW. The engineering firm said it had inducted just six aircraft in 2020, but expects to more than triple that number this year as more lines open in China and the United States. “Over the next five years, we are going to go about three times more, in other words about sixty aircraft by 2024,” said Hean Seng Tan, VP of commercial business and commercial aerospace at ST Engineering. IAI is looking to add up to two conversion lines in Europe for both the 767 and 737NG, according to Matalon. Currently IAI has seven lines for the 767 at its Tel Aviv (TLV) facility, and two additional lines at a partner facility in Mexico City (MEX), Matalon said. In June, the company will induct its first 777-300ER for conversion at TLV, and the aerospace company is also looking for a site outside of Tel Aviv (TLV) to augment conversion capacity for the 777, said Matalon. Guangzhou Aircraft Maintenance Engineering Company Ltd. (GAMECO), which added its first 737-800BCF conversion line in 2019, added a second last year and is planning a third next year . GAMECO said it requires a commitment of twenty nose-to-tail conversions in order to justify allocating a line to conversion. “We expect at least twenty aircraft in a row to make that investment, to have a dedicated team, and to have a dedicated hangar,” said CEO and general manager Norbert Marx. If a slot goes unused, or there is a gap between a freighter redelivery and the next induction, MROs struggle to reposition crews focused on freighter conversions without lengthy notice because of the different skill sets required for heavy maintenance. Promising nose-to-tail commitments to an MRO would require signed contracts for dozens of conversions, quipped Matalon. “Even right now with the 767 — it’s burning — it’s not working like this,” he said. While IAI doesn’t have the visibility to promise its conversion sites twenty back-to-back conversions for opening a new line, even for booked-out programs like the 767, there is added value in being one of only a handful of sites in the world that can handle large structural modifications. Prestige aside, it’s common for MROs to handle heavy maintenance while an aircraft is in conversion. “On top of the conversion, there are thousands of man-hours for the MRO on top of the conversion,” he said. ST Engineering, which handles the majority of its conversions at its own subsidiary facilities, tries to develop a three-year forecast of conversions so that its MRO facilities have a rough idea of induction schedules. “If these aircraft are not coming, obviously, they [the MROs] will have to chase maintenance work,” Tan said.

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