Freighter retirements and new conversions alter engine landscape

Air cargo growth has extended the service life of soon-to-be obsolete airframes in recent years, even as orders for new conversions and factory-built models continue to increase. The prolonged need for lift capacity along with conversion delays due to a constricted supply chain have pressed carriers to continue operating freighters that previously had been scheduled for retirement, while seeking viable alternatives for the long run. As operators and lessors seek replacement options, available feedstock and maintenance costs are key factors to consider when selecting a conversion candidate, but the available engines, support and cost may have the greatest influence on the final selection. The table below shows the approximate distribution of engine types across most major jet freighter models, based on Cargo Facts research. We will predominantly focus on the narrowbody segment here. Sources: ch-aviation, Cargo Facts The Boeing 737 Classic and NextGen make up the majority of the current narrowbody market share, but each only has one engine type. With the arrival of A320Fs and A321Fs, customers can choose between two engine types for each model: the CFM56-5 series or the International Aero Engines (IAE) V2500. Two Airbus narrowbody freighters, two engine options Since Cargo Facts ’ last engine overview in August 2021, four more A321-200P2Fs and one A320-200P2F have been redelivered; these five aircraft were converted by Elbe Flugzeugwerke (EFW). Two of the A321-200P2Fs, powered by V2500 engines, were placed into service with Qantas, while Titan Airways added its third and youngest A321-200P2F equipped with CFM56-5Bs and SalamAir also opted for CFM56s on the first A321F to be based in the Middle East. In total, EFW has now redelivered seven A321P2Fs and one A320P2F with CFM56s and three A321P2Fs with V2500s, while 321 Precision Conversions has redelivered one A321PCF with CFM56s. Despite what appears to be an early lead by the CFM56, more A320 Family freighters with V2500s are on the way. Smartlynx, which currently has two A321Fs with CFM56s, will soon take delivery of its first V2500-powered unit. That aircraft (1204, ex-Air Astana) arrived at the Avocet facility in Sanford (SFB) in March 2021 for conversion with 321 Precision Conversions and will be leased from Cross Ocean Partners. U.A.E.-based Vaayu Group, which placed an order with ST Engineering to lease five A320-200P2Fs, took delivery of the first unit (2737, ex-IndiGo) with V2500 engines and expects to receive the second (2724, ex-Orange2Fly) in 2023. Meanwhile, two programs still in development have both used aircraft powered by V2500 engines as their prototype: C Cubed Aerospace, which launched its A320CCF conversion program in 2019 with the 2001-vintage unit 1523 (ex-Sky Airline), and Sine Draco, which inducted a 1999-vintage A321-200 (963, ex-AtlasGlobal) in October 2021. The V2500 is on the rise The immediate availability of the CFM56s yielded favorable returns, but early results only provide a glimpse into the market potential of each engine type, as high expectations have been placed on the V2500. “I think initially what you're seeing is available airplanes coming out of the passenger fleet being retired or returned to the lessor,” Larry Gray, senior marketing manager at Pratt & Whitney, told Cargo Facts . “It just happens to be more CFM56s in the near term, but I think in the long term you're going to see more V2500s.” [caption id="attachment_56859767" align="alignright" width="560"] More A321 freighters with V2500 engines will soon be redelivered. (Photo/Pratt & Whitney)[/caption] As International Civil Aviation Organization (ICAO) noise standards enforce stringent measures on engine compliance, this may prove to be an advantage for the V2500, particularly in Europe, where fees are levied on carriers that are not compliant with Chapter 4 requirements for overnight operations. “In some airports in Europe, noise is a sensitivity, so you would think there’d be more operations where you need the Chapter 4 compliant airplane,” Gray said. “With CO2 emissions, as the industry drives to net-zero by 2050, I think the V2500 offers an advantage with a lower fuel burn. I think in the longer term, you’re going to see it catch up and surpass the CFM56.” An analysis of the growth potential of the A321 freighter conversions reveals there is a surplus of V2500 inventory to support the various programs. “If you look at the total A321 fleet, I think there are more V2500-powered A321s overall,” Aero Capital Solutions (ACS) Chief Commercial Officer Dan Watson told Cargo Facts . “I haven’t looked at that in detail from an age perspective, but I think generally what we’re seeing from a feedstock standpoint is that there are V2500 airframes that are available and appropriate for conversion.” Pratt & Whitney’s Gray added that the V2500 can capture a significant portion of the freighter market share because it powers around 60% of the A321s in passenger service. “If you break down the A321 fleet, around two-thirds of that fleet is ten years old or younger,” he said. Although A321s are narrowbody airframes, their payload and range are not considered to be in the same class as 737NGs. Instead, they are being highly touted as replacements for 757 freighters. 757s still going strong The 757-200 is powered by two engine types: Rolls-Royce RB211s and Pratt & Whitney PW2000s. With 428 Rolls-Royce and 176 Pratt & Whitney engines providing thrust, the 757-200F has benefited from a pandemic-induced boost that has resulted in even more conversions than Precision Aircraft Solutions had previously expected. Pratt & Whitney is confident that it will be able to indirectly support the PW2000s through the company’s long-term agreements with its passenger and military clients. The PW2000 powers the U.S. Air Force C-17 aircraft and Delta Air Lines’ 757 fleet, providing sufficient inventory to support the 100-plus conversions flying for FedEx, UPS and other carriers, Gray told Cargo Facts . The majority of 757s that have been converted in the past one to two years have been RB211-powered units previously flying with American Airlines and purchased by AerSale, which topped up its conversion order with Precision in early 2022. Still a few cycles left The 737 Classic extended its lifecycle with more than 350 passenger-to-freighter conversions powered by CFM56-3 series engines. A proven commodity, the CFM56-3 remains a primary option for now, even as 737NGs with CFM56-7B series engines enter the market. For the moment, the CFM56-3 is going to continue to be in active service as the 737-400 is still in high demand, ACS’ Watson told Cargo Facts . [caption id="attachment_56859768" align="alignright" width="560"] The CFM56 powers all 737NG freighters. (Photo/CFM)[/caption] Delays in the conversion process due to the pace of 737NG conversion orders in conjunction with the A320/A321 freighter programs gaining market share momentum, along with limited NG feedstock during the 737 MAX grounding, have all contributed to the resurgent interest in 737 Classics. “The demand in the 737 Classic freighter is still out there and domestically it is still strong,” Carlos Cock, CEO of Xtreme Group Holdings, told Cargo Facts . “As we see more -800s come onboard in the next few years — I would say four to five years — we’ll probably see this demand going away.” While the CFM56-3 series still has plenty of green time, the emergence of CFM56-7B and -5B series engines and the 737NGs or A320/A321s that they power will eventually lead to the older power plant being phased out of the primary market. Watson told Cargo Facts he believes the longevity of the -3C1 engine is on a time clock and will eventually become a niche market, relative to the general 737NG and A320-family conversion growth. There are approximately 1,200 CFM56-3 engines in service versus more than 26,000 currently installed CFM56-5B/7B and IAE V2500 engines, Watson added. The workhorse behind the 737NG, the CFM56-7B can be found on more than 140 freighter conversions around the world, with the total production output of more than 15,000 units providing plenty of feedstock for the conversion cycle of the airframe. “The repair shops are gearing up for the -7B for the 737-800,” Cock said. “We see that transition starting to happen and there’s inventory out there.” The CFM56-7 — the apparent successor to the CFM56-3 series engine — will enable carriers to utilize a reliable powerplant that has surplus inventory and predictable maintenance expenses for years to come. “From a freighter standpoint, cargo airlines operating 737-300/400 freighters are certainly faced with issues on the CFM56-3, as they struggle to find affordable engines or suitable MRO options on aging and high-maintenance aircraft,” Watson said. “This is one of the key elements to the continued long-term trend of airlines transitioning to the 737NG freighters, which have a much more reliable performance and stable maintenance cost.” ACS itself has steadily topped up its conversion orders with Aeronautical Engineers Inc. (AEI) and become the largest customer of the 737-800SF program. It is too early to tell if the CFM56-7 series will mirror the success of the CFM56-3 series — which had little to no competition — given the relative infancy of A320 conversions using the CFM56-5 series and V2500. When an engine’s useful life ends The ongoing effort to reduce CO2 emissions, fossil fuel burn and noise levels has propelled the retirement of quad-engine widebodies in favor of twin-engine airframes such as the 777-300ER/-200LRs, 767-300ERs and A330-300/-200s. EFW has so far redelivered twelve A330-300P2Fs and five -200P2Fs, all with Rolls-Royce Trent 700s except for three older -300s powered by Pratt & Whitney’s PW4000. The Airbus medium widebody is expected to eventually replace 767-300Fs and -200Fs, almost all of which are equipped with General Electric CF6s. Approximately 924 CF6 engines provide power to five freighter types: 747-400F/-200Fs, 767-300Fs/-200Fs and MD-11Fs. Many of these aircraft are nearing retirement age, leaving the powerplant with a relatively limited time on wing before it becomes unserviceable. The PW4000 and CF6 will continue to provide power to multiple airframes, while the GE-90 transitions the widebody market from four to two engines. Apart from the GEnx-2Bs elevating the 747-8F, tri- and quad-engine widebody freighters will soon give way to the fuel-efficient, cost-effective, twin-engine freighters, capable of moving airfreight globally while reducing the carbon footprint of today’s aircraft. With more Pratt-powered 767-300ERs now being selected as conversion candidates by companies like Cargo Aircraft Management, Saltchuk Aviation and YTO Cargo Airlines, Pratt & Whitney expects its PW4000 powerplant to continue earning frequent flyer miles powering freighters, even if on a smaller scale than the CF6. “If you use the JT8D as a marker of longevity and a very reliable fleet, it's going to serve the freight community very well for a long time,” Pratt & Whitney’s Gray said. “Our PW4000, what we call the 94-inch- fan, 60K version, is on the KC-46 tanker, and the Air Force is going to be operating that for probably twenty-plus years, out past 2040 and beyond.” There are more than 400 PW4000s currently in operation, providing lift to a mix of medium and large widebody Boeing and Airbus freighters averaging more than twenty years of service as freighters. These airframes, listed in the chart, will eventually make a final approach to retirement, paving the way for 777s and A330s powered mostly by GE90s and Trent 700s. Signs of engines nearing retirement The global impact of the COVID-19 pandemic created an opportunity: A financially struggling industry was resurrected with aging aircraft and engines, while STC holders expedited their original planned dates of entry for new freighter types to help move freight — including some normally carried by ocean liners and passenger planes. Global dependency on air cargo led to a break from the pre-pandemic norm and was fueled by greater volumes in the express and e-commerce markets. However, with passenger planes returning to service and supplementing the available capacity with their belly space, the operation of antiquated engines and freighters for a cargo carrier may no longer be sustainable. “I think what you’re going to find in the next few years is that the engine market becomes a little bit of a feast-and-famine scenario,” Watson said. “It’s a typical process that historically engines have followed when they get into clear retirement — where availability of serviceable engines is a pure function of aircraft retirements and where investments into those engines are few and far between.” This feature was originally published in the September 2022 issue of Cargo Facts. Cargo Facts Symposium, taking place LIVE Oct. 19-21 at the InterContinental San Diego, is the essential event for stakeholders in the air cargo industry. Learn more and register today .

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