Putzger perspective: 737 wobbles

737-800BCF. Photo copyright: Boeing

No, this is not about the woes of Boeing’s 737 MAX aircraft. We’re looking at a plane that only yesterday was selling like hotcakes.

At the beginning of August, there were nine converted B737-800 freighters looking for buyers, according to aircraft valuation specialists IBA.

Aeronautical Engineers Inc., which was the first to launch a conversion programme for the type, now has elbow room to slip a new order into the schedule.

A year ago it was sold out well into 2026, with all conversion lines running at full throttle.

A few of them have been idled this year, a development that has played out at other conversion specialists too.

A year ago these players were still looking to boost capacity.

For that matter, Boeing announced this past March that it was going to set up a 737-800 conversion line in India that would come on stream towards the autumn of next year.

The 737-800 freighter has become a bit of a poster child for the rampant demand surge of the pandemic era.

As Jonathan McDonald, IBA’s manager of classic and cargo aircraft, put it, “everyone and his dog was converting 737-800s last year”.

According to IBA, the type has been converted at a faster rate than any other P2F programme.

The slowdown in the market has hit that momentum.

What’s more, there are no indications of a recovery before the second quarter of next year, according to most observers.

Nor can the industry realistically hope for significant tailwind from congestion in surface lanes or labour disputes.

Demand cycles are not the only issue. Amazon is speeding up its delivery times, but not with airfreight.

It is rapidly setting up micro fulfillment centres that stock fast-moving inventory which is replenished with the use of predictive analytics.

The e-commerce giant has put the brakes on its aircraft fleet expansion and cancelled or chose not to renew leases for freighters with Western Global, ATSG and Silver Airways.

Some of the conversion scramble was down to aircraft leasing firms when leasing rates for freighters outstripped those for passenger planes.

That curve has since crossed back to a pre-pandemic balance.

With passenger planes in hot demand, the leasing firms can place their aircraft in the more lucrative passenger market again.

Feedstock prices for conversion candidates have soared, further eroding remaining appetite for turning passenger planes into freighters.

Putzger perspective: Not there yet

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