Conversion capacity remains tight but new lines are on the horizon

With strong air cargo, express and e-commerce market performance, demand for cargo conversions is at an all-time high — particularly for the 737-800, 757-200 the 767-300. Activity for the A321 and A330-300 is also picking up. After around fifty narrowbody redeliveries in 2020, we are expecting to see around 100 in 2021 and a similar number in 2022. For the 767, we expect to see around forty redeliveries this year with similar numbers in 2022. The current known backlog of 737-800s is more than 100 units, mainly destined for lessors. For the A321, the figure is around fifty units. Meanwhile, the known backlog for 767 conversions is about fifty; for the A330 there are about forty, a large portion attributable to ATSG. In the 330 number we do not include Avolon's thirty aircraft launch commitment for the IAI A330 program. The figure below shows an overview of the status of various conversion programs as of today. While there is a wide choice of aircraft types and programs in the narrowbody and medium widebody space, there will not be any available conversion options in the large widebody space until early 2023. We do not count the 747-400 program as active, even though IAI states that it is an active program. In fact, a number of "active" programs for older types have not produced any conversions for a number of years. This includes the IAI 737-300/400 conversions and ST Engineering's 757-200 programs. When it comes to classics, the activity is centered on AEI (737s and MD-80s), Pemco (737s) and Precision (757s). There are three active 737-800 programs (Boeing, AEI and IAI) and two programs for the less popular 737-700 (Pemco and IAI). There have been two 321 conversion programs available since April with two more in various stages of development. EFW has commenced the development of an A320 conversion, and C3 also has a program under development. It is unclear at this stage how many Airbus narrowbody programs will make it through to achieving STC. On the 767, IAI's program has been dominant, but Boeing is expanding in both China via GAMECO and Ethiopia via Ethiopian MRO. More on this expansion later. After a slow start, EFW's A330 program is picking up steam and it is expected that IAI will also have completed certification of a competing program within a few years. Getting a large widebody freighter these days is a bit like buying a car — you either have to wait for a new 777-200F, overpay for a used unit or scour the aircraft graveyards of the world for something half serviceable. This will change in a few years, with an A350F and 777XF becoming available. Around 2023, there should be at least one 777-300 conversion option. We foresee that only about 20% of the demand in the large widebody segment will be met by conversions, so it's worrisome that there are three 777 conversion programs in development. We do not think there is enough demand to sustain three programs, and none have any OEM support so far. While supply chain issues are creating their own constraints, capacity will remain tight until new conversion lines are added in the coming years. The interactive dashboard below shows an overview of existing and planned conversion locations by type as well as our estimate of annual current line capacity for the most popular programs: the 737-800, 757-200 and A321, the 767-300 and A330-200/300.

These are the basic assumptions behind our capacity estimates: Turnaround time (TAT): For 737s, approximately ninety days; for A321s and A330s, 120 days; for 767-300s, 110-120 days; and for 757s, ninety days. This implies three to four units per year, per line. In the TAT figure above we have added fifteen days for additional concurrent heavy maintenance, which can range from two to four weeks. Some facilities and providers are faster than others, particularly in the early stages of a program until the first units of a new MRO can take longer. We have not taken kit production and supply chain constraints into account, but we understand that this is currently an issue for multiple conversion programs. Our conclusion is that, on the 737-800 in particular, Boeing is operating at capacity. The same applies to Prevision on the 757, and both IAI and Boeing on the 767-300. On the 737-800, Boeing currently has about ten to twelve lines, while AEI has around nine, and IAI has 4. An additional four to six lines are likely to be added over the next 12 months in San Jose (Boeing) and Europe (IAI and AEI). This is a smart move as positioning aircraft and crews into China is difficult due to ongoing restrictions. On the 767, IAI is running about eight lines at full capacity while Boeing has three. Boeing is adding an additional three lines — two in China and one in Addis Ababa, which will produce its first conversions in 2023. Use the conversion locations tab on the above map to explore the different actual and planned locations by conversion company and aircraft program. The bigger question, however, remains: Will all of these aircraft find a home? That is a particular worry for the narrowbody space, which is running at a much higher rate than we have forecast. So, perhaps our forecast is wrong.

Cookie	Duration	Description
34f6831605	session	General purpose platform session cookie, used by sites written in JSP. Usually used to maintain an anonymous user session by the server.
a64cedc0bf	session	General purpose platform session cookie, used by sites written in JSP. Usually used to maintain an anonymous user session by the server.
ARRAffinity	session	ARRAffinity cookie is set by Azure app service, and allows the service to choose the right instance established by a user to deliver subsequent requests made by that user.
ARRAffinitySameSite	session	This cookie is set by Windows Azure cloud, and is used for load balancing to make sure the visitor page requests are routed to the same server in any browsing session.
cookielawinfo-checkbox-advertisement	1 year	Set by the GDPR Cookie Consent plugin, this cookie is used to record the user consent for the cookies in the "Advertisement" category .
cookielawinfo-checkbox-analytics	11 months	This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics".
cookielawinfo-checkbox-functional	11 months	The cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional".
cookielawinfo-checkbox-necessary	11 months	This cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary".
cookielawinfo-checkbox-others	11 months	This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other.
cookielawinfo-checkbox-performance	11 months	This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance".
crmcsr	session	General purpose platform session cookie, used by sites written in JSP. Usually used to maintain an anonymous user session by the server.
JSESSIONID	session	The JSESSIONID cookie is used by New Relic to store a session identifier so that New Relic can monitor session counts for an application.
PHPSESSID	session	This cookie is native to PHP applications. The cookie is used to store and identify a users' unique session ID for the purpose of managing user session on the website. The cookie is a session cookies and is deleted when all the browser windows are closed.
viewed_cookie_policy	11 months	The cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. It does not store any personal data.

Cookie	Duration	Description
_zcsr_tmp	session	Zoho sets this cookie for the login function on the website.
e188bc05fe	session	This cookie is set in relation to Zoho Campaigns
iamcsr	session	Zoho (Customer Support) sets this cookie and is used for tracking visitors (for performance purposes)
WFESessionId	session	This cookie is necessary to enable a Power BI session, a Microsoft tool that helps visualize data.

Cookie	Duration	Description
_ga	2 years	The _ga cookie, installed by Google Analytics, calculates visitor, session and campaign data and also keeps track of site usage for the site's analytics report. The cookie stores information anonymously and assigns a randomly generated number to recognize unique visitors.
_gid	1 day	Installed by Google Analytics, _gid cookie stores information on how visitors use a website, while also creating an analytics report of the website's performance. Some of the data that are collected include the number of visitors, their source, and the pages they visit anonymously.

Conversion capacity remains tight but new lines are on the horizon

Passenger-freighter flights ramp up to meet peak demand

Feeder freighters: Lots of activity, but is there growth?

Related Posts

Stored freighters dwindling as demand stays high

On-time parts availability will remain key challenge for MRO companies

Amazon’s network grows despite soaring shipping costs

Cargojet continues to dominate the Canadian landscape, but for how long?

Feeder freighters: Lots of activity, but is there growth?

Privacy Terms

ADA Compliance

Welcome Back!

Retrieve your password

Conversion capacity remains tight but new lines are on the horizon

You need a subscription to access this premium content!

Passenger-freighter flights ramp up to meet peak demand

Feeder freighters: Lots of activity, but is there growth?

Related Posts

Stored freighters dwindling as demand stays high

On-time parts availability will remain key challenge for MRO companies

Amazon’s network grows despite soaring shipping costs

Cargojet continues to dominate the Canadian landscape, but for how long?

Feeder freighters: Lots of activity, but is there growth?

Privacy Terms

ADA Compliance

Welcome Back!

Retrieve your password