From the Cockpit with Magma CEO Peter Kerins

Magma Aviation is looking to expand its widebody freighter capacity for customers in 2025 and beyond. This could come in the form of both medium-widebody and large-widebody freighters , adding to the A321-200P2F and 737-800BCF capacity that United Kingdom-based Magma began offering in the second half of 2024. [caption id="attachment_57150026" align="alignright" width="380"] Peter Kerins, CEO of Magma Aviation. (Courtesy/Magma Aviation)[/caption] The company also strengthened its commercial presence in the Middle East by opening an office in Dubai that year. Magma’s own-controlled fleet includes one production 747-400F, one 747-400BCF and one 747-400BDSF, all operated on an ACMI basis by Air Atlanta Icelandic. Cargo Facts caught up with Peter Kerins, who was appointed chief executive in August 2024, to discuss Magma’s plans for growth and his strategy for the company. What follows is an edited version of the conversation. Cargo Facts : What milestones have you achieved since being appointed CEO? Peter Kerins: At Magma, we didn’t need to change a lot, which made the job a hell of a lot easier. But what we did was we looked at where we had historic points on the network and where we had our foundations. What were the good parts of the network? We had a look at that, at our sales partners, where we were flying to and why we were flying there. We decided to reconfigure some things on the network, and some of it has been there almost since Magma was founded fifteen years ago, so taking them out was a little bit painful, but that surgery has put us in a better place now. CF : What are some examples of those changes? PK: For example, we were flying into Johannesburg, and we decided to take that down. Fifteen years ago, that was quite a strong market out of Europe, and there was a feed into that market, and down in South Africa, it can be quite volatile with the currency and things like that. So, we decided to take that away, which allowed us to get more bandwidth on other programs that we had. About 90% of our flying was around Africa and the United States. We could have taken a lot of that capacity out and put it into China toward the end of 2024, but we decided not to do that. We decided to stay with our established markets, which paid off into the first quarter of 2025, and has been pretty strong for us. CF : What are Magma’s main priorities for the next three quarters? PK: I said to the team that as we go into 2025, the one thing that we need is agility. We have to be able to move. But we know that 80% to 85% of what we do today is contracted. It’s pretty solid and not done on a hit-and-hope basis. And so, we have that 15% of capacity that isn’t underwritten and that’s our opportunity. But we haven't gone and put all our eggs, or a lot of our eggs, in the basket of China. We only operate two flights a week to Hong Kong. So, the rest of the network is pretty stable, and that gives us a great footing going into 2025 and beyond, for the plans we have going into 2030. Magma’s biggest priority is to secure more capacity. At the end of last year, it was almost impossible to talk to anyone about additional leases of aircraft. It seems to have opened up slightly. I won’t say it’s completely open. People are waiting to see what’s happening in the United States and various other things, but our goal by the end of this year is to add more capacity, and that could be anywhere between 60% to 80% additional capacity for the expansion that we are planning. There’s continued evaluation of our network as well. We have to consistently look at the markets, which at the moment are in flux. When you saw a bit of capacity coming back in at the end of last year, people were even taking narrowbody or mid-sized freighters to try and fill gaps out of China. That’s not there now, and we have been offered some mid-sized freighters over the past several weeks with the change in climate with e-commerce and things like that. [caption id="attachment_57150027" align="aligncenter" width="1302"] Air Atlanta Icelandic operates three 747-400Fs for Magma. (Courtesy/WFS)[/caption] CF : How would medium widebodies fit into Magma’s network and operations? PK: It’s about the right size fit. If we have a route, let’s say, going into Africa out of Liege and a customer wants to give us a fifty-tonne block space agreement, or whatever it may be, a 747 freighter is just too big. We looked at other options but the ones coming to us toward the end of last year were just too expensive. It was going back to almost Covid pricing on an ACMI basis. Those economics may have worked in the final quarter last year but may prove to be costly in the soft quarters. So, we assess that and the risk involvement. All the good work that we’ve done over the past eight months could literally be undone by taking on the wrong ACMI deal on a couple of aircraft. We’re pretty cautious — but also optimistic as well with the markets we're looking at — that we can gain support. And we’re looking at a sort of new sales structure as well globally based on what we’re doing, appointing various agents or partners in different regions, putting ourselves in a pretty strong position. We’ll only take additional aircraft if the price is right. These aren’t short-term deals; these are three- to four-year deals on aircraft, so we have to be pretty sure that we’re going to make them pay. CF : Will Magma consider increasing its presence in the Asian market? PK: You can’t ignore it. It’s such a big market, and the volumes that were coming out in 2024 were significant. You only have to look at the charter prices that were being bandied around in the last quarter. It was crazy, but that’s how the market was. We’re looking at other areas in Southeast Asia as well as China. We don’t want to become too reliant on any one area. Africa has been the backbone for what Magma has done over the years. But now, I’d say 50% of our flying is to Africa. So we have been able to adapt, and we’re seeing more of that. The Middle East is obviously quite a big market when you look at the sea and air business. Could we do something in the Middle East? Is the market too saturated? Probably, at the moment, it is. But we are looking at other areas in Southeast Asia and looking at other programs in the United States as well. We have to be flexible, we have to be agile and we have to be able to move very quickly. But we’re lucky we have a good spread of established business that goes from the United States to Europe and into Asia, and we’re not risking all our capacity in one area. CF : How has the narrowbody freighter offering been performing? PK: It’s a challenging market. When you look at what’s in this region, I always compare narrowbody freighter sales with widebody passenger aircraft. Whilst Magma didn’t have narrowbodies before, our parent Avia Solutions Group as a group has, and so we got a lot of experience within the group that was able to help with putting these aircraft in. They are operated today purely on a charter basis. There are no ACMI deals or no specific routes but that’s been quite lucrative for us so far. This was almost a beta test to put the aircraft in here to see what we do and how we can make it grow. What is the market potential? That’s still being assessed at the moment, but we’re hopeful that if we can get successful routes on some of these aircraft, we could operate maybe even to the point of feeding or defeeding a 747 that may be in Dubai. We’re looking at all options. CF : Thinking about widebody replacements, how important is the 747 nose-loader freighter to Magma’s business? PK: If we’re doing diversions into Africa, and you’re talking about major oil and gas, for example, yes, it can be important, but we don’t bank on it. It’s a small part of the business — probably 1% of the overall business — so sitting around with a nose-loader hoping to get out-of-gauge material doesn’t make sense. I don’t think it would be a big financial hit for us not having a nose-loader. I have to say, the nose-loading 747-400F is a fantastic aircraft that has been a great workhorse for a long, long time, but we’re not reliant on it. That's more opportunistic business than steady streams. Our natural progression is to get into the 777 market when the time is right and when they become available. Register now for Cargo Facts EMEA, an essential regional event for industry stakeholders, on May 6-8 at the Shangri-La Bosphorus in Turkey.

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