Pandemic drag on 737-800 values accelerates conversions

Across all active programs and for 737-800s in particular, demand for passenger-to-freighter conversions has accelerated. This likely would not have been the case had the pandemic not freed up quality conversion feedstock at prices commensurate with what the cargo market can accept. Directly preceding the COVID-19 pandemic, prices for 737-800 feedstock were estimated to be more than $20 million, according to Robert Convey, senior vice president of sales and marketing at Aeronautical Engineers Inc. (AEI), during an Oct. 19 webinar by valuation and advisory firm IBA Group titled, “The future of the passenger-to-freighter conversion market: 2021 and beyond.” [caption id="attachment_416622" align="alignright" width="512"] Conversions of 737-800s have accelerated since the onset of the pandemic. (Photo/STAECO)[/caption] “It was just trading out of reach of the conversion. The airlines or the lessors that were trying to get into that market space couldn’t afford to buy a $21-22 million Boeing 737-800 that was twenty or nineteen years old at the time and put another $4-6 million into it. A $27-28 million -800 doesn't work,” Convey said. According to Convey, once the pandemic kicked in, prices for 737-800s began to fall. “We saw -800s on the market for circa $10 million, maybe $12 million, and that really started the rush into the -800 that happened to coincide with the -400 running out of course,” he said. “And then you have COVID demand through online shopping and e-commerce exploded. So, it was kind of a perfect storm, at least in the narrowbody sector, for just driving conversion demand.” “The variety of airline operators taking converted freighters has changed too," according to Jonathan McDonald, IBA head analyst of commercial aging aircraft. "It’s not just those in the U.S. but others in countries like China, Ireland, Nigeria, and Russia," he said. But what’s also changed is the age and source of the feedstock. “We’ve seen [frames] as new as ten years old being converted that’s a function of the feedstock price coming down and again in terms of where the aircraft is coming from,” McDonald said. “Ryanair has a massive fleet of -800s and as they slowly begin to take the MAX 8 200ss on board, they’ve slowly been releasing some of their older leased -800s.” Already, around fifteen ex-Ryanair 737-800s are now flying or will soon fly with ASL Aviation Holdings, while others have gone to customers of GECAS like Atran and S7 Airlines. According to McDonald, Ryanair units make excellent conversion feedstock. The airline’s 737-800 fleet includes more than 400 units, many of which are on leases slated to expire as it takes delivery of unfulfilled orders for 737 MAX aircraft numbering 191 units as of Sept. 30, according to Boeing’s order book. “The Ryanair aircraft [have been in a] predominantly benign operating environment throughout Europe, these days probably doing 2-to-2.2-hour sectors,” McDonald said. SAS, another European operator, is producing decent conversion candidates as it chooses to return some of its older 737NGs. “[With] SAS, again, predominantly Northern European climate, very benign condition, being with the operator all the time,” he added. DHL Express recently began service with an ex-SAS unit (30468) and has at least two or three more on the way. IBA estimates the typical trading price for a 737-800 with engines is currently between $18 and – $19.5 million, with newer aircraft possibly at just over $20 million. The company estimates lease prices to be between $180,000 and $195,000 depending on the operator credit and country risk. Cargo Facts Symposium, taking place LIVE Oct. 25-27 at the Wynn Las Vegas, is the essential event for stakeholders in the air cargo industry. Learn more and register at www.cargofactssymposium.com .

Pandemic drag on 737-800 values accelerates conversions

Ryanair, SAS aircraft serve as good feedstock

Lufthansa Cargo, WiseTech Global create direct e-booking API

September traffic: Asian operators report more of the same entering “peak”

Related Posts

Western Global Airlines CEO Jim Neff joins Cargo Facts Symposium 2026

A350F successfully completes maiden test flight

A350F performs engine, rejected takeoff tests ahead of maiden flight

September traffic: Asian operators report more of the same entering "peak"

Cargo Facts Free Newsletters

Cargo Facts Connect Podcast

Follow Us

Welcome Back!

Retrieve your password