Risk averse freighter operators are seeking younger conversions, while overcapacity and passenger feedstock demand blight the market, according to aviation consultant Cirium.
Age isn’t just a number in the freighter conversion business. In fact, every year matters when it comes to getting the most mileage for your money, highlighted Cirium in its November ‘The Freighter Market: Mixed Signals’ webinar.
Converted freighters are from stock retired from the passenger fleet and there are limited newbuilds in operation due to supply chain delays, so freighters are substantially older than the global passenger fleet. This topic is a constant concern for cargo carriers.
Some of the older passenger to freighter (P2F) aircraft types, such as Boeing 757 and MD-80s, can be well north of 20 years, said Chris Seymour, head of market analysis at Cirium. Some aircraft have even been converted as old as 30 years of age.
But the older an aircraft is at its conversion age, the less use an operator will get out of it.
“The issue with converting older aircraft is how much life do you get beyond that as a freighter,” pointed out Seymour.
Balance is key, he suggested. If an aircraft is converted at 15 years old, then it has “another 15 years of life as a converted freighter”.
Carriers are looking for younger conversions currently, Cirium research shows, but even these are not particularly young.
Newer generation narrowbodies such as the Airbus A321 and Boeing 737-800 “have been converting at about 17-21 years old”, said Seymour. “They are typically younger than some of the older aircraft types.”
Young feedstock is particularly sought after for the widebody market. Daniel Hall, senior valuations consultant at Cirium, stated that widebody aircraft are comparatively younger than narrowbodies, but pointed out: “The factory-built widebodies, the 767F and 777F, are pulling the average age of the fleet down.”
Seymour stated that newer generation widebodies such as the Airbus A330-300 and A330-200 and Boeing 777-300ER are being converted at 12-18 years of age.
“Typically, you might expect them to be 15-20 years old.”
In comparison, 767-300ER conversions are more usually over 20 years old.
Furthermore, the Boeing 747-400P2F could be phased out in the next few years because of high maintenance costs. The fleet size is currently 60 aircraft with a 25–35-year age bracket.
Market overview
Following a surge in 2021, narrowbody passenger to freighter (P2F) conversions peaked in 2023 and are now declining with reduced demand alongside overcapacity.
“This year there’s been very few orders for narrowbody conversions,” said Hall, “Perhaps because of (the) over-exuberance of the previous two-three years.”
Speaking about the difference between overall tracked flight activity and aircraft in fleets, Seymour, said: “The widebody fleet has grown by about 10% [in terms of tracked flight activity] over 2020 levels and the narrowbody fleet by around 50%.”
He added: “Their five-year change in the in-service fleet has been 20% and 24% respectively.
“This suggests there’s a little bit of overcapacity of actual metal, particularly in the narrowbody sector in both absolute size and also fleet size and its share of growth as well.”
Seymour said there are currently 360 freighter conversions on backlog, but this number has likely reduced as some (widebody) feedstock has been recalled to the passenger market.
Too many narrowbodies
Cirium data has provided an insight into which narrowbody programmes are alive and well and which are nearing the end of their lifecycle.
Airbus A31P2F conversions continue to grow, with current programmes in progress by Elbe Flugzeugwerke (EFW) and 321 Precision, plus one in development by C Cubed, observed Seymour.
He questioned whether a fourth programme by Sine Draco is still in development due to a lack of updates from the company.
There are a high number of A321P2F aircraft that have been converted that are yet to enter service, found Cirium. “One could argue that four programmes is slightly too many for the A321,” Seymour remarked.
EFW and C Cubed also have programmes for the Airbus A320P2F.
Boeing narrowbody conversions are also in demand. Aeronautical Engineers Inc. (AEI), Boeing and Israel Aerospace Industries (IAI) are running programmes for the 737-800, which analyst IBA has previously said is dominating the market with too many conversions being carried out.
Hall added that there are about 60 737-800s parked by airlines and lessors currently. “You could argue perhaps there were too many 737-800s converted a bit too soon,” he said.
Narrowbody conversion programmes now winding down include AEI’s 737-400 and 737-300, substantial numbers of the latter are parked.
Retirement of 737 classic conversions has increased. As of November 7, there had been 12 for 2024. They are typically being retired 10-15 years after conversion, according to Cirium’s research.
IAI and Pemco are also now reduced to carrying out Boeing 737-700 conversions in “very small numbers” noted Hall.
“This is an opportunity for the -800 NG with the far larger fleet size, and payload, performance and volumetric capacity,” he said in reference to the type's current over conversion but under utilisation.
Cirium also suggested Precision’s 757 programme is close to ending.
“FedEx has parked quite a large number of their (757) fleet this year. Perhaps it too is coming to the end of its useful life,” Hall added.
Further, Seymour stated that AEI is still converting regional MD-80 and CRJ aircraft “in relatively small numbers”.
New to the narrowbodies is the Embraer E190 and E195 conversions, though both are yet to come to market.
Widebody woes
While narrowbodies are in overcapacity, a shortage of widebody passenger feedstock for conversions is becoming apparent. Boeing recently predicted an undersupply of large widebody freighters in the second half of the decade.
New widebody deliveries remain constrained from Airbus and Boeing and the continued return of passenger routes and frequencies is resulting in demand for widebody passenger aircraft, meaning there is limited supply for conversions.
Seymour said some of the older aircraft types, such as the 767-200ER, are now very limited in numbers.
Boeing and IAI are carrying out conversions of the 767, which has been the “stalwart” of the widebody conversion market in the past 10 years. Cirium data shows 767 conversions were in demand until 2023.
But Seymour said: “We are seeing slightly fewer conversions being done this year. Feedstock is running lower.”
Hall added: “767 feedstock, particularly young feedstock, is almost finished now.” He added aircraft of this type under 15 years number just 24 aircraft.
Meanwhile, back in 2021, there was a surge of orders for the Airbus A330 and Boeing 777, due to aircraft becoming available from the passenger market and an increasing need for widebody capacity.
The A330 fleet was sought after because it was young and available for conversion, according to Cirium, although many -300s have now returned to passenger service. Additionally, storage is limited with many A330s in storage already claimed for conversion. Subsequently, values of the aircraft type have doubled since 2021.
However, Seymour said EFW is increasing the number of A330 conversions it is carrying out, while IAI has started work on its first A330 conversions for launch customer Avolon. “Probably those will come along in the next couple of years.”
777 conversion progress
There are currently three 777-300ER conversion programmes in place with IAI, KMC and Mammoth.
Plus, there is one 777-200LR programme in development with Mammoth. The number of aircraft available to convert are fewer compared to the -300ER, but the 200LR should be closely matched with the capability of the 777-200F production freighter, believes Cirium.
That said, Cirium also asserts the -300ER conversion will offer a high-volume freighter and be a good replacement for some of the 747-400 converted freighters and MD-11s.
Supplemental Type Certificates (STCs) for the three -300 conversion programmes should be granted in the next year or so, said Seymour. He stated that IAI are likely to get their STC first though “whether it is this quarter of 2025 remains to be seen”.
Despite widebody conversions being more in demand than narrowbody conversions, Cirium has identified hesitancy in the market.
Lower levels of demand were partly attributed to the backlog of freighter orders that are deemed sufficient for the next few years.
“We have seen some cancellations of previous orders being placed. It’s in relatively small numbers but it shows that the market has pulled back a bit.”
But perhaps air cargo operators should take their opportunities as they come. In addition to limited scope for widebody freighter feedstock, there is little scope for parked widebody freighters to return to active operations.
Seymour said most parked widebody freighters are old and are being used for parts and engines. There are other issues too. Many of the stored 747-400 aircraft are converted but it is production nose-loading models that are in demand.
Additionally, A300-600 freighters have issues with pilots, parts and support, 747-800s comprise Airbridge aircraft in Russia and the majority of A330-300 are converted and awaiting entry into service.
“In reality, there are probably very few parked freighters which could come back into service to support the long-haul fleet, he said.
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