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Vol. 39, No. 8A
Kalitta ACMI-leases 777F to DHL Express 
US-based Kalitta Air began operating its recently acquired 777F (35607, ex-Emirates) on an ACMI basis for DHL Express on 30 July. Kalitta is only the third of what will likely become a growing number of 777F operators based in the United States, joining FedEx Express and Southern Air.

Like other ACMI operators, Kalitta recognized that the majority of large widebody freighters DHL plans to add to its fleet over the next few years will be 777Fs. A move last year by DHL to purchase 777Fs directly from Boeing, rather than to lease them on an ACMI basis from carriers that own or lease the aircraft – as has been the case in the past – is also expected to open up the bidding process for CMI operations to additional carriers. Of the fourteen 777Fs DHL has on firm order with Boeing, two have thus far been delivered and placed into CMI operations. The express carrier received its first 777F (66079) in May 2019 and the second one (66080) in June. Both are being operated on a CMI basis by Atlas Air subsidiary Southern Air, which had already been flying six other 777Fs for DHL on an ACMI basis. 

Until last month, when Kalitta took delivery of its first 777F on lease from DAE Aviation however, the operating platform was absent from the carrier’s fleet. Now that this is no longer the case, Kalitta has told Cargo Facts that it would look at continued fleet growth as opportunities arise – but 777F CMI operations are also a possibility. Returning to the carrier’s proof-of-concept, less than one month after arrival in the US, the aircraft began flying for DHL Express. Initial flights link DHL Express’ Americas Hub (CVG) with Miami (MIA) and New York (JFK), though it is unclear if this will change. Previously, Kalitta had operated 747-400BCFs and 767-300BDSFs on behalf of DHL. Apart from the 777F, the airline’s current fleet comprises of twenty-five 747Fs and eight 767Fs.

Moving forward, the number of 777F operators in the US could grow further. Last year when Air Transport Services Group (ATSG) acquired Omni Air, ATSG edged closer to 777F operations with Omni’s trio of 777-20ERs in passenger configuration. ATSG has said part of the appeal of the acquisition is the potential for 777F CMI operations. 
Atlas looks to moderate fleet growth as tariffs sting in 2Q19
Despite a 10.5% year-over-year increase in block hours flown in 2Q19 across the company’s ACMI and Charter segments, Atlas Air Worldwide Holdings reported operating revenues that were nearly flat for the quarter (-0.3%) at $664 million. Company CEO Bill Flynn acknowledged on an earnings call with analysts that the third tranche of tariffs that went into effect in mid-May 2019 began to have a notable impact on air cargo volumes, and subsequently, yields. Results were also affected by “labor-related service disruptions,” added Flynn.

After a four-year period during which the company’s ACMI, Charter and Dry Leasing units experienced phenomenal fleet growth, Atlas CFO Spencer Schwartz said that most fleet additions during 2H19 would be to the “asset-light” ACMI fleet, most of which will likely be aircraft owned by other carriers and transferred to Atlas carriers for CMI operations. As it stands now, the company does not currently have any outstanding orders for freighter conversions or new-build freighters.

Already this quarter, much of Atlas’ fleet growth was in the CMI segment as Southern and Atlas began operating six additional aircraft. Southern Air began operating three 737-800BCFs on a CMI basis for Amazon and two 777Fs on a CMI basis for DHL Express. Atlas Air, meanwhile, began flying a 747-400F on a CMI basis for NCA. Looking ahead to the remainder of the year, Southern will add two more 737-800BCFs for Amazon, while Atlas will begin flying two additional 747-400Fs on a CMI basis for NCA (see also: Third NCA 747-400F arrives in maintenance before reentering service with Atlas). The company’s dry leasing also has a 777F (35606, ex-Emirates) awaiting placement. Atlas also plans to upgauge the 747-400Fs it currently operates on an ACMI-basis for Qantas. According to a statement by Atlas this April, it had agreed with Qantas to upgauge the two 747s to -8Fs from “late July 2019” and would fly them on trans-Pacific routes connecting Australia and Asia with the US. As we reported, the upgauge has been delayed, but is still expected to occur in 3Q, following “regulatory sign-offs”.

As can be seen from the chart above, the total number of aircraft equivalents operating across Atlas’ ACMI, Charter and Dry Leasing segments has increased from 60.8 units in 2Q15, to 112.1 at the end of 2Q19. Much of the growth in the dry-leased and ACMI fleet during this period stems from the lease of twenty 767-300Fs to Amazon. Atlas has also added the equivalent of four 747-400Fs to its charter segment since 2Q15.

Returning to the 2Q19 carrier’s results, operating income also declined, by 85.3% to $9.0 million. However, net income was $86.9 million for the quarter, thanks primarily to income tax benefits. Although a sudden de-escalation of the Trade War between China and the US is a possibility, and such a move could boost air cargo demand, this week’s headlines do not suggest this is likely. Yesterday, US President Donald Trump announced via Twitter that he would impose an additional 10% tariff on $300 billion in Chinese imports, beginning 1 September.

Looking ahead to the remainder of 2019, Flynn expects “full-year adjusted net income will total approximately 80% of our 2018 adjusted net income.”

Qatar Airways takes delivery of 17th 777F, continues rapid growth 

After completing a series of flight tests around Boeing’s Everett, Wash., factory last week, a 777F (66335) departed Everett’s Paine Field (PAE) for Doha, Qatar (DOH) on 30 July, for delivery to Qatar Airways [FAT 005075]. The delivery represents Qatar’s seventeenth 777F, leaving a backlog of four of the type remaining on firm order with Boeing. The carrier is accelerating delivery plans for the four outstanding 777Fs on firm order with Boeing and expects to receive all four this year, according to Guillaume Halleux, Chief Cargo Officer, Qatar Airways.

Beyond the four units, Qatar is also expected to firm up commitments for five more 777Fs as part of a deal inked at the White House, and announced at the Paris Air Show in June. Including 66335, the QR Cargo fleet now consists of twenty-four freighters of three types; seventeen 777Fs, five A330-200Fs and two 747-8Fs.
For sale on Facebook: Uzbekistan Airways 757s and 767s
In what may seem like a rather unconventional platform on which to trade aircraft, in a move to reduce debt leverage, Uzbekistan Airways has put out a notice on its official Facebook page announcing an upcoming tender for eighteen aircraft aged fifteen-plus years. A pair of 767-300BCFs, both less than twenty-three years of age, two 767-300ERs aged fifteen years, and sixteen years respectively, are included among the aircraft on offer. The carrier also plans to part ways with two of its five 757-200s, and though no MSNs have been provided, the entirety of Uzbekistan Airways’ 757 fleet was minted about twenty years ago. 

Even in the face of current air cargo market headwinds, competition for the feedstock and freighters is expected to be fierce. Last year when ATSG secured rights to twenty 767-300ERs coming out of American Airlines’ passenger fleet in the coming years, other bidders were left empty-handed. Since then, most 767-300ERs to hit the market have been in batches of one or two units. China-based SF Airlines was one carrier reported to have been interested in the twenty-unit batch of AA 767-300ERs, and is likely unaffected by the fact that all of Uzbekistan’s 767s are powered by Pratt & Whitney PW400s. Although General Electric CF6 engines are overwhelmingly the more popular option as powerplants for freighter-converted 767-300Fs, some carriers have been willing to operate 767F fleets with mixed engine types. Of SF’s eight 767-300BCFs, two are Pratt-powered. 

Uzbekistan’s five Il-76TDs and seven IL-114s on offer, meanwhile, might not move as fast. 
Recent freighter aircraft transactions: 
Boeing delivered a 767-300F (65789) to UPS [FAT 005074]. The aircraft was ferried from Everett (PAE) to San Antonio (SAT). 

Israel Aerospace Industries redelivered a 767‑300BDSF (24035, ex-American Airlines) to Cargo Aircraft Management following conversion to freighter configuration at IAI’s Tel Aviv MRO [FAT 005077]. The aircraft will be operated by an ATSG-affiliate carrier on behalf of Amazon starting later this year.  
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