A few weeks ago, on June 24, Carsten Spohr the CEO of the Lufthansa Group let out of the bag a number of documents and a clear chart showing the rapid demise of the MD-11F fleet at the airline’s Investors Day. Having topped that off with adding verbally that Lufthansa Cargo would get more 777F’s in 2020 if its results were good enough, the analytical consensus, tied to the rubbish trading conditions forecast for the whole of 2019, led to a general agreement that the MD-11F fleet was toast – and by the end of 2020.
Having realised the scale of the comments implications somewhat more slowly than the rest of the world, Lufthansa Cargo has taken an entire 5 weeks to, well, ‘sort of’ outline what he really meant, because the future is in such flux when it comes to cargo, nothing is sacred or certain.
- The Lufthansa Group Board hasn’t said the Cargo arm can have more 777F’s yet
- IF it says no, the MD-11F’s will be phased out as they get to 25 years of age – Lufthansa scraps all of its aircraft at 25 as a matter of policy. More on this later.
- Lufthansa Cargo CEO Peter Gerber doesn’t want to keep the MD-11F’s. They burn too much fuel and their Co2 output is way to high, which with new EU legislation and Co2 trading schemes and so on, makes them progressively prohibitive to run and looks bad in an ever more environmentally aware world.
- By the end of this year AeroLogic, which is a 50-50 DHL/Lufthansa Cargo business, will have four 777F’s totally operated on behalf of Lufthansa, on top of the aircraft Lufthansa runs itself.
- Lufthansa cargo does not want to shrink its overall capacity, but it’s not looking to grow it excessively in any way, which wouldn’t be sustainable either.
MD-11F’s D-ALCA,B,C,D,E are already heading towards 22 years of age, E is already in storage. F, H, I, J, K, M & N are all heading rapidly to 20. Four more have been sold, 2 scrapped, and 1 was written off and dismantled.
A key factor now will be how fast they come up on their D-Check and wether there’s enough time to operate them post D-Check before the compulsory scrap date. D-Checks are extremely time consuming and very expensive, anything less than a 3 year lifespan post-D would unlikely be worthwhile.
The overall estimation is that an MD-11F costs 2.2 times the cost of a 777F, but the air frame is free of charge as they’re owned, not leased or still being written off as a capital expense.
There’s also the other tricky issue of bulk retirement – 4 would have to be replaced in 2022, 5 in 2023-24 and 3 in 2025, if they were retired solely on age which is unlikely.
Based on carrying capacity, a 777F moves 145,000Kg while an MD-11F freights around 92,000Kg. Allowing for 11 operational aircraft they can move around 1,000,000Kg – it would take only 7 777F’s to do the same. While that doesn’t make up for everything, especially frequencies and locations, the cost savings are vast.
My bet is still very much on a quick retirement. The airline knows that it’s costs that inhibit Cargo from making profit, and the MD-11F costs far too much and every year the cost will rise by a significant percentage. Brand new 777F’s – which Boeing is now building faster than ever to make up for lost production on the 777-9 and -300ER, (and will therefore burn through its back log quicker requiring new orders), means it can get them sooner, at a better price. I don’t think they’ll let the opportunity slip.