Cargo is the winner, MAX ups and downs…

Is there going to be anything to replace the iconic 744F?

Cargo victorious but long term 744F replacement worries

The biggest positive of the last year has unquestionably been cargo, the reasons for that are straightforward enough. Demand from lockdown trapped customers for parcel deliveries nearly tripled. On top of that with restrictions on freight travel by road and sea varying standards of what even constituted a lockdown, production vagaries and demand for suddenly ‘hot’ items all sent the need for speed and air freight through the roof. On top of that vaccine shipments have been the icing on the air shippers cake.

In 2020 the world fleet of cargo aircraft lift capacity was down 17.7% on 2019. That created a lack of availability and that created high prices as demand soared unexpectedly in 2020. This year has seen 51 old widebodies returned to service – including some MD-11F’s.

However there are big issues brewing in the longer term and many operators are wondering what they’re going to do.

The 744F is now almost out of conversion kits, nobody wants to convert an MD-11F and there are no parts to make that possible anyway. If you can find a young enough and viable enough 744 to convert, and that’s something that put simply, is nigh on impossible, the cost is too high. Despite the huge numbers of 744’s that have been sent to retirement, the vast majority have ended up as key fobs and replacement parts.

The only large widebody still in series production is the 777F as 767’s now limited

There just isn’t enough of a return viable on a 744F that’s newly converted. Those that are flying, or can be returned to service from storage, already have been and owners are happy with what they have.

The alternatives are now the 772 and the 773 as a widebody freighter conversion. In respect of the 772 variants, these suffer the same kind of issues the 744 does. They’re already elderly, with oldest versions at over 25 years and the youngest 772ER is already 8 years old and still too young to retire. Even so the effective delivery of the 772 passenger aircraft fell dramatically following the 773/ER variants entry.

Yet again, the older 773 version is too old to represent good conversion (from passenger) material, and the 773ERF is actually quite an expensive proposition.

The cost of conversion is around US $30 million, so for one young enough to be viable the delivery price of a -300ERF is expected to be about US $54m and around $42.7 million for a 772ERF. That’s a big outlay and it takes a cargo owner with some backbone to take that on. The much vaunted 777-300ERF being offered by IAI and GE won’t even be available until 2024.

There are plenty of A330-200 and 300 available and they’re cheaper, and there is a programme to carry out the work, but they’re not what everyone wants.

However, when it comes to smaller aircraft 737-800’s, -400, -700, and 757-200 are in huge demand. The A321 is also showing high demand because of its of Airbus approved conversion. A320’s are less in demand, because the price differential between them used is minimal and the A321 makes a better overall deal.

Part of their popularity is the huge rise in airline retirements of aircraft they normally would have kept far longer, its driven down prices of used feed stock and made them far more viable than they ever were before.

Yet the worry remains, what to do to fill the gap the 744F will leave in the market as it retires? Over the next ten years many of the remaining 744F’s will be scrapped as parts and maintenance costs rise making them uneconomical. What then to replace it with? Quite simply, there’s nothing, and there’s not likely to be, leaving freight operators with few good choices.

MAX ups and downs as service re-entry continues

Call me old fashioned, but I long ago made up my mind I would rather go by train, or three flights or anything else to avoid getting on a 737MAX for as long as they exist. Nothing would make me trust it. Seeing one the other day have to return to base because an engine failed – and thats not the first one since they went back into service, onlyemphasises my distrust.

Then along comes another Boeing insider excoriating Boeing for the way it handled the MAX saga, even after it said it would do better. Then add that to a story about the current CEO saying he wouldn’t take any basic pay – only to find he didn’t, but he got $21 million in bonus and shares, it sort of underlines the way Boeing operates hasn’t really changed. It just leaves a bad taste in the mouth.

Up to the end of February Boeing had delivered 70 of the stored but not handed over 450 in its inventory. As of March 2, 12 airlines were operating 87 737-8’s and -9’s. China, which had 100 of the grounded aircraft hasn’t yet authorised flying, nor has India or Singapore.

Boeing’s production is due to rise to 30 per month next year, but I’ve seen multiple analyst reports that say there is noway it needs to be that high, most suggesting a figure around 22 would be more like it. It’s not known what the current rate actually is, Boeing haven’t said.

Meanwhile, the raft of cancellations, while sometimes agreed with various airlines, has in Norwegian’s case, gone to court in the US. The Airline has cancelled pretty much all of its order of MAX and 787’s, and they couldn’t reach an equitable solution. Others may find themselves tied to orders they might not really want. The other end of the story is that United ordered another 20 and despite it all, BA still haven’t ditched their order, but they got such a deal it’s hard to imagine they ever would.