Interest Growing In 777 Freighter Conversion

Boeing is already speaking to potential customers about a future program for Boeing 777 passenger-to-freighter conversions, but when this program will be launched depends on 777 residual values coming down.

Senior VP-Commercial Aviation Services Lou Mancini declines comment on when the 777 freighter conversion program will launch, but says, generally, there is a 20-year rule governing when it becomes suitable to make a freighter conversion program available. If this rule is applied to the 777, then it means Boeing would launch a 777 freighter program in 2014-15, in time to have the first aircraft completed in 2017, he says.

But the key to when Boeing will launch a 777 passenger-to-freighter conversion program is the residual value of the 777 passenger aircraft and, at this stage, there is no sign that 777 residual values are falling, says Mancini.

Boeing also needs to secure a sizable launch customer to kickstart the program. The aircraft maker has been approached by potential customers, and Boeing has done the designs for the conversion and analysis to show what the operating costs and performance of such a freighter would be, says Mancini.

Once Boeing is ready to launch the program, there also is a strong possibility that a maintenance, repair and overhaul (MRO) company in Asia may be chosen to do the work.

Mancini says Boeing Shanghai, Taikoo Aircraft Engineering Co. in Xiamen and Singapore Technologies Aerospace in Singapore would be contenders. Boeing is a shareholder in the two Chinese facilities. Taeco already performs 747-400 passenger-to-freighter conversions. Boeing Shanghai has no passenger-to-freighter conversion programs, but Boeing was looking to have Boeing 767 passenger-to-freighter conversions done there before the 2008 global economic downturn put an end to that plan.

ST Aero could be well-positioned to win the deal, because it has a close relationship with Boeing. It already does 767 and MD-11 passenger-to-freighter conversions. ST Aero, which is a government-linked company, could also make use of national carrier Singapore Airlines to help secure the deal. SIA is one of the largest 777 operators in the world. The Southeast Asian nation also is a logistics hub, so it has close business ties with cargo companies, such as FedEx, which could be a future customer for 777 converted freighters. But Boeing Shanghai's advantages are that Boeing is a major shareholder in this MRO and that China is a bigger market than Singapore.

(Via AVIATION WEEK)