CFS 2019: Program delays and tight feedstock supply constrain in-flux narrowbody conversion market

[caption id="attachment_412764" align="alignright" width="442"] Seated left-to-right during a conversion panel at CFS 2019: Jeff Lee, associate editor, Cargo Facts; Bob Convey, SVP Sales & Marketing, AEI; Rafi Matalon, EVP Marketing, IAI-Aviation Group, Brian McCarthy, VP Marketing & Sales, Precision Aircraft Solutions; Alevy Pratt, Director, Boeing Converted Freighters and complex modifications, Boeing Global Services; Wolfgang Schmid, VP Sales & Marketing for Airbus Freighter Conversions, EFW.[/caption] SAN DIEGO – Conversion houses and OEMs have developed, or are in various stages of developing, a new generation of narrowbody freighter conversion programs based on the A320-family and 737-NG platforms. Although operator demand remains strong, redeliveries have yet to reach their full potential, according to panelists on a conversion panel last week at Cargo Facts Symposium 2019. Feedstock and engine prices remain steep, a condition exacerbated by the continued grounding of the 737 MAX and the recent pickle-fork issue with the 737 NGs, which are delaying program certification and redeliveries. EFW , one of two companies nearing completion of an A321-200 passenger-to-freighter conversion program, cited tight engine supply for new delays to its program. The 55/45 JV of ST Engineering Aerospace and Airbus had originally expected an STC for its A321-200P2F in 4Q19 but now says the program is delayed until 2020. The conformity aircraft (835, ex-Onur Air), owned by Vallair, is sitting at the ST Aerospace’s Seletar facility without engines, said Wolfgang Schmid, VP Sales & Marketing Airbus Freighter Conversions, EFW. An STC is now expected in 2020. 321 Precision Conversions (a JV of Precision Aircraft Solutions and Air Transport Services Group ), meanwhile, expects to commence flight testing on its A321PCF conformity aircraft shortly after next year, according to Brian McCarthy, VP Sales & Marketing, 321 Precision Conversions. 321 Precision’s conformity aircraft (891) is undergoing conversion at the Avocet facility at Orlando Sanford Airport (SFB). Commenting on engine supply for 737-800NG and A321-family conversions, McCarthy expects managed engine and power-by-the-hour programs to become increasingly popular with cargo operators. Given the lack of low-cycle engines available on the market, and the high-cost associated with rebuilding an engine, such programs could reduce the capital expenditure required to add a new freighter type. Regardless of engine supply, panelists agreed that acquisition costs for the new types won’t be dropping precipitously any time soon. Whereas the on-ramp cost to add a 737-800F currently hoovers around $22-26 million, more than double the cost of adding a 737-400 Classic freighter, according to Bob Convey, SVP, Sales & Marketing, AEI . Assuming the MAX is recertified, and the pickle-fork issue is addressed, “it will be at least two more years of struggles before pricing comes down,” added Convey. Until 737 NG feedstock becomes more affordable, AEI and PEMCO say they will continue to convert 737 Classics as feedstock becomes available. Recent months have seen an uptick in not just 737-400 Conversions, but -300s as well. Both AEI and PEMCO have logged orders for 737-300 conversions in 2019. Demand for 757-200s also remains unabated. Precision Aircraft Solutions has converted 128 757s to date, and expects to convert about eight or nine more each year for the next three to four years. “There are still 187 757s flying, some of which are newer aircraft,” said McCarthy. Following the recent collapse of Thomas Cook Airlines, there was also a question of whether there could ever be a conversion program for the 757-300. While modification would yield an 18-pallet narrowbody freighter, the -300 variant was produced in limited number. With just 54 aircraft in service, a program would be difficult to justify unless a large number of airframes becomes available. “If enough feedstock surfaces to warrant the engineering cost, and 10-15 get converted, we’ll see them all get converted,” said McCarthy. Were Precision to launch a program for the 757-300, McCarthy estimated that engineering would take just six months. For now, and regardless of airframe values, Boeing continues to convert 737-800s in large numbers. Alvey Pratt, director, Boeing Converted Freighters and Complex Modifications, Boeing Global Services, said the company has logged orders and options for 130 737-800BCF conversions. Earlier this month, Boeing redelivered its 20th freighter-converted 737-800 and is on track to deliver 17 this year. See video highlights from Cargo Facts Symposium 2019 here .

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