Conversion numbers are expected to fall again this year fuelled by overcapacity in the narrowbody market, feedstock limitations and weaker demand levels.
During an IBA webinar on the future of the freighter market, Mike Yeomans, director of advisory and consulting, said the aviation advisory firm expected cargo demand growth this year to moderate to 5% year on year in cargo tonne km terms down from 11% last year.
Meanwhile, the cargo load factor is expected to decline slightly to around 45%.
However, there were further downside risks to the demand forecasts due to the potential impact of US tariffs on China and the potential withdrawal of the de minimis exemption. Overcapacity is therefore a concern for 2025, he said.
On the supply side, Johnathan McDonald, manager classics and cargo aircraft, said the narrowbody freighter market is expected to be affected by overcapacity due to the high number of conversions carried out in the post-pandemic era.
IBA figures show that in 2023 more than 120 narrowbody aircraft were converted into freighters. Last year this fell to just over 70 aircraft.
Looking at types, the Boeing 737-800 conversion declined to 2021 levels last year and is likely to fall further this year - he pointed out that Boeing’s Gatwick line has now closed.
Conversions of the Airbus A321-200s also declined from 2023 levels, although not to the same level as 737-800s, and there are reports of some examples being returned to lessors.
Overall, he said that the next few years are expected to be quiet for the narrowbody market as feedstock is difficult to acquire and there is overcapacity in the market.
Meanwhile, lease rates for narrowbody aircraft have been trending downwards over recent years as a result of lower demand levels. In contrast, feedstock pricing remains high, the combination of which is putting further pressure on the narrowbody market.
The widebody conversion market is also being affected by the limited feedstock of the Boeing 767-300ER aircraft, which has been the most popular widebody conversion for a number of years.
Conversion numbers for the 767-300 fell from almost 45 in 2023 to just over 20 aircraft in 2024.
Meanwhile, conversions of the Airbus A330-300 increased in 2024 as more conversion lines came online. There is a possibility that the number of A330-300 conversions could exceed that of the 767 this year, McDonald said.
Overall widebody conversions were down from around 55 in 2023 to just under 40 in 2024.
Looking ahead, widebody conversions are expected to fall from just under 40 last year to closer to 30 this year and narrowbody conversions are predicted to be down from just over 70 last year to just under 50.
The narrowbody conversion market will be at its lowest level since 2020, while the widebody market will be at its lowest level since 2021 as conversion numbers return to pre-Covid levels.
IBA also took a look at the much anticipated 777-300ER conversion progammes. It said that three 777-300ER programmes were still in the works - IAI, Mammoth and Kansas Modification Center - and IAI was expected to be the first to gain certification.
However, McDonald said that feedstock was expected to be more limited than initially thought as delays to the Boeing 777X passenger model meant that airlines were holding onto their 777-300ERs for longer, which is limiting feedstock.
