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AUG 16
Vol. 39, No. 8C
Qantas to add A321P2Fs
Australian carrier Qantas will introduce up to three passenger-to-freighter converted A321s to its fleet, as part of an expanded seven-year agreement signed with Australia Post [FATs 005092-5093]. With the first aircraft entering into service in October 2020, the A321P2Fs will be flying exclusively for Australia Post, which has had an airmail agreement with Qantas since 1922.

There are currently two A321-200 passenger-to-freighter conversion programs that have already inducted an aircraft and cut metal: 321 Precision Conversions, a joint venture between Precision Aircraft Solutions and Air Transport Services Group (ATSG), and Elbe Flugzeugwerke (EFW), a 55/45 JV between ST Engineering Aerospace and Airbus. But which program will redeliver the first A321-200P2F freighter?

Although Qantas did not go into detail regarding how it will source conversion feedstock, or which companies will be involved in redelivering the carrier’s first A321P2F, the carrier boldly stated that it would be the first airline to operate the A321P2F. Cargo Facts believes Luxembourg-based Vallair will lease at least one EFW-converted A321-200P2F to Qantas, and is likely being considered as a lessor for the other two aircraft as well, though the lessor and conversion house both declined to comment.

In February of this year, Vallair began advertising A321-200Fs converted by both companies as available in the first quarter of 2020. Given that Vallair is the launch customer for both programs, and because Qantas expects it will take the first freighter-converted A321, the lessor’s involvement in supplying Qantas with an A321F is almost certain. Vallair currently has two A321-200s in conversion, one each with EFW and 321 Precision Conversions. One of the A321-200s (891, ex-FlyCAA) was acquired by Vallair from AerCap in August 2017 and is in conversion with 321 Precision Conversions at Orlando Sanford International (SFB). A second (835, ex-Onur Air) is in conversion with EFW at Singapore’s Seletar (XSP) facility.

Expected redeliveries for the conformity aircraft will depend on when regulators issue STCs for the programs. Previously, both conversion programs have announced expected program certification by 1Q 2020, though ATSG told investors last week, “The target is to have the STC approved by the end of the second quarter of next year.” EFW, for its part, still anticipates an STC in 4Q19, with the first redelivery following sometime in 2020. and for now, at least, appears likely to receive an STC ahead of 321 Precision Conversions.

Returning to the Qantas deal, social media posts from a source familiar with the deal linked the Australian carrier to Vallair, ST Engineering Aerospace and EFW-converted A321s. This likely means that 835, currently undergoing conversion in Seletar, will end up operating in the Qantas Freight fleet. Separately, Cargo Facts believes that while the carrier intends to add a total of three A321-200P2Fs, only the order for the first unit has been firmed up. As for the other two, final sign-offs are expected shortly.

Qantas expects each A321P2F to be capable of carrying nine tonnes more than the four 737-300SFs (23478, 23486, 23488 and 23490) and one 737-400SF (24796) it currently has, operated by wholly owned subsidiary Express Freighters Australia, which also operates a single 767-300F (33510, ex-ANA) and will operate the A321P2Fs for Qantas. Although neither Qantas nor Express Freighters currently operate any A320 family aircraft, we note that fellow Qantas-affiliate Jetstar Airways operates eight A321s and fifty-two A320s.

Qantas previously confirmed to Cargo Facts that the older of its 737-300SFs “will start to be replaced over the coming two to three years,” but didn’t specify which types were being considered. Even though Qantas didn’t say whether any 737s would be removed once the A321s start arriving, we wouldn’t be surprised if the carrier uses the agreement to seriously evaluate renewing its freighter fleet entirely with A321P2Fs.

Apart from Vallair, San Francisco-based lessor BBAM recently signed a letter of intent with EFW for one A321P2F at the Paris Air Show [FAT 005020]. Cargo Facts learned last month that that frame will be leased to UK-based Titan Airways by the end of 2020.

Separately, California-based C3 Aerospace and Washington-based Sine Draco are also working on A320/A321 P-to-F programs of their own, but neither have announced launch customers.
Cargo Air postpones 737 freighter conversions
Bulgaria-based Cargo Air holds firm orders for two 737-800BCFs along with two options but has agreed with Boeing to postpone the agreement for another two years to 2023 because the 737 MAX issues are causing 737-800 feedstock prices to remain high, the carrier confirmed to Cargo Facts. When the price is right, Cargo Air may consider adding 737-800s to its fleet and first operating them in passenger configuration until conversion slots become available.

In the meantime, a planned 737-400 passenger-to-freighter conversion is also delayed. Cargo Air will keep a single 737-400 (28882, ex-Go2Sky) in passenger configuration and maintain ACMI operations with it for leisure carriers for “at least one more summer season” in 2020 because of high demand for passenger 737 frames while the MAX is grounded.

Excluding unit 28882, Cargo Air’s fleet now consists of three 737-300SFs and seven 737-400SFs, flying predominantly on behalf of DHL Express.

Hong Kong Airport returning to normal after multi-day disruptions  

Earlier this week, protesters occupied the terminal building of Hong Kong International Airport (HKG) prompting hundreds of passenger flight cancellations on Monday and Tuesday. Late Tuesday evening, the airport authority obtained an injunction against the “unlawful and willful obstruction of or interference with the proper use of the airport,” and on Wednesday began resuming normal operations and rescheduling flights that had been canceled.  

Although most freighter flights were unaffected by the disruption, some forwarders preemptively  redirected consolidations through neighboring airports such as Shenzhen (SZX), Macau (MFM) and Guangzhou (CAN).  Most air cargo stakeholders Cargo Facts spoke to believe the protests do little to erode Hong Kong’s competitive edge in efficiency and flexibility, at least in the near-term. Long term, there is concern that ongoing violent protests, could “undermine Hong Kong’s reputation as an international transportation hub and the world’s busiest cargo airport,” according to a statement from Hong Kong Association of Freight Forwarding and Logistics (HAFFA).
Korean Air’s 2018 freighter fleet reductions buoy yields amid market weakness 
Korean Air reported 1H19 cargo traffic down 10.7% year-over-year, to 3.6 billion FTKs on headwinds from the US-China trade war. A precipitous drop in yields or load factors was avoided by capacity reductions, including the removal of two 747-400Fs from its freighter fleet in 3Q18, which led to a 2.8% y-o-y drop in cargo capacity to 5.1 billion AFTKs for the first half of this year.

The two 747-400Fs (26408 and 32809, both now operated by Kalitta Air) were retired as the final component of a freighter fleet-adjustment initiative that began in 2017 following the delivery of Korean Air’s twelfth 777F and seventh 747-8F. At the end of 1H17, the carrier’s freighter fleet numbered thirty aircraft, including twelve 747-400Fs, seven 747-8Fs and eleven 777Fs – but executives from the airline admitted at the time it wasn’t possible to utilize all thirty aircraft. By October 2018, the fleet stood at just twenty-three units with four 747-400ERFs remaining in service.

Last year, when IATA was predicting growth of 2-3% for 2019, the carrier said it was expecting no further reductions to its freighter fleet. As market conditions have deteriorated in recent months, this could change, but for now, cargo yields remain stable, up 1.2% y-o-y in 1H19 despite cargo revenues that were 9.6% lower. Load factors dropped 6.2 pp to 70.1%, a figure that includes belly hold capacity on the carrier’s passenger flights as well
Recent freighter aircraft transactions: 
FedEx took delivery of a 767-300F (63109) from Boeing [FAT 005089]. The aircraft was ferried from Everett (PAE) to Indianapolis (IND).

FedEx took delivery of a 777F (40671) from Boeing [FAT 005090]. The aircraft flew from Paine Field (PAE) to the express integrator’s hub in Memphis (MEM).

FedEx sent an MD-10F (48263) to scrap in Victorville (VCV) [FAT 005091].

Cargo Aircraft Management acquired a 767-300ER
(29229, ex-LATAM) [FAT 005081]. CAM also acquired three 767-300ERs set to exit the All Nippon Airways fleet [FATs 005097-5099].  

Hawaiian Airlines took redelivery of an ATR 72-200F (432, ex-First Air) following conversion to freighter configuration by IPR Conversions at the Empire MRO facility in Coeur d'Alene (COE) [FAT 005060]. The aircraft was subsequently handed over to Empire Airlines for operation on a CMI basis for Hawaiian's regional subsidiary, 'Ohana. 

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