Air Cargo Forum: Boeing hails UPS 747 order and says there's more to come

27 / 10 / 2016

Boeing has described UPS’ order for 14 Boeing 747-8 freighters as seminal and expects more orders for the aircraft to follow.

Speaking at Tiaca’s Air Cargo Forum shortly after the deal was officially announced, Boeing Commercial Airplanes regional director, airline market analysis marketing & business development Tom Crabtree and regional director, cargo marketing & environmental strategy Thomas Hoang said they were grateful to UPS for the order.

At list prices, the deal is valued at $5.3bn.

Hoang added that he expects more orders for the aircraft because of general market growth, which is expected to accelerate in around 2018, and also because of the number of 747 freighters that are more than 20 years old and will need to be replaced over the coming years.

In total, there are 50 B747s that have reached 20 years of age, he explained.

“UPS is a premier cargo carrier that knows the business and doesn’t invest in equipment that doesn’t offer a return on investment,” Hoang said.

Before the UPS order, Boeing had a backlog of six of the 747 freighters, with 74 ordered and 68 delivered. This has now increased to 20.

There had been talk that the B747 could be removed from production because of a lack of demand and Boeing had cut production of the aircraft down to six per year.

Crabtree said he couldn't speculate on what the deal meant for the production cycle, but if Boeing were to maintain the current pace it would take more than three years and four months to fulfill the current orderbook.

The order is therefore seen as a major boost for the model.

“When you have a company like UPS place an order for 14 B747s it reaffirms that you have a product that the industry values and will continue to value,” Hoang added.

He pointed out that the B474 freighter accounted for half of the total freighter capacity in terms of available freight tonne kms.

Crabtree said the order was a seminal moment for the aircraft. He added that it was a misconception that express operators do not operate widebody freighters.

He said that more than half of 1,770 freighters are operated by express operators. For widebody freighters, express operators accounted for just under half of the capacity.

FedEx and UPS alone operate just under 600 freighters.

Crabtree said that this deal – and the amount of capacity operated by express firms − reaffirms Boeing’s belief that 50% of the air cargo market would be catered for by freighter aircraft in the future.

“This is the biggest vote of confidence we have had in our product strategy in several years,” he said.

Yesterday, Boeing announced its outlook for air cargo growth over the next 20 years, with a projection of an improvement of 4.2% per year over that time frame.