Investor appetite in 737-800 freighters runs heavy

Appraisers and carriers with exposure to the air cargo market expect investor appetite for the 737-800 to remain as a popular option for extending the life of the investment and aircraft. Conversion orders, particularly from lessors that had not previously dabbled in the 737-800 conversion space, continue to increase the order backlog for STC holders Aeronautical Engineers Inc. (AEI), Boeing and Israel Aerospace Industries (IAI). With the air cargo market running in high gear, redeliveries are finding their way to operators both new and established, minimizing the near-term risk for a saturated narrowbody freighter market. As the pandemic continues to hamper demand for passenger travel, aircraft owners “are stuck with aircraft, [and] they're trying to find different options for them,” Dave Andrew, CEO of ASL Aviation Holdings, told Cargo Facts. “I'm sure there will be some more investments in freighters, and not just in the -800s, but other types as well,” he said. While there is always some degree of risk for lessors converting aircraft without having an operator lined up, “if you just look at where the freight market is at the moment, I think it's probably a small risk,” said Andrew. With the -800 in particular, “if you can get them at the right values, they would make a nice replacement for a -400. The ASL group, whose carriers operate one of the largest fleets of narrowbody conversions, recently firmed up ten options and is in the process of converting a total of twenty 737-800s to freighter configuration with Boeing . [caption id="attachment_415479" align="alignright" width="560"] Macquarie AirFinance, whose 737-800 customers include Poland-based Enter Air, has ordered four 737-800SF conversions. (Photo/Enter Air)[/caption] On March 2, another lessor joined the list, with Ireland-headquartered Macquarie AirFinance announcing an agreement with AEI to convert four 737-800s into freighter configuration [FATs 006010-6013]. This is the first foray into freighter conversions for Macquarie, whose website shows a portfolio that currently includes sixty-five 737-800s. The four aircraft will all be converted at the Commercial Jet facility in Miami (MIA), according to a press release from AEI, but both AEI and Macquarie declined to disclose additional details such as induction months or specific airframes. John Willingham, CEO of Macquarie AirFinance, said in a press release that the order was prompted by “particularly strong demand in the express freight sector as the e-commerce industry continues to grow,” and that “it makes business sense” to extend the life of the lessor’s mature 737-800s. Macquarie becomes the second new lessor to outline conversion plans for the 737-800 this year, after Vx Capital sent its first 737-800 to be converted with AEI in January . As of March 2, at least fifteen of Macquarie’s 737-800s were in storage, according to ch-aviation. The 737-800s in Macquarie’s portfolio range in age from seven to just over twenty-two years old. GA Telesis, which announced a 737-800SF conversion deal with AEI deal last July, exercised its option for a second aircraft two months later. The lessor recently confirmed to Cargo Facts that it is preparing the first freighter (32903, ex-Pegasus) for delivery to a confirmed customer, and that it has identified a shortlist of customers for the second (28826, ex-Blue Air). GA Telesis also told Cargo Facts that the market is holding steady and that it is looking to add more 737-800 freighters to its portfolio by converting more with AEI. In terms of operators adding the platform, carriers in Africa, Asia, the Americas, Europe and elsewhere are evaluating the addition of the type in the near future, carriers and lessors have told Cargo Facts. Most recently, South Korea-based Air Incheon is set to begin operating its first 737-800SF later this year, on lease from BlackRock . Other lessors that have ordered 737-800 conversions in the past twelve months include Aero Capital Solutions, Aircraft Finance Germany, BoComm Leasing and GECAS. Cargo Facts Asia, taking place April 20-21 as a virtual experience, is the event for exploring opportunity in the Asia-Pacific region. The event continues to bring together the best, brightest, and most innovative executives in the global air cargo industry. Learn more and register at www.cargofactsasia.com .

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