* Airbus secures first deal for A350 freighter
* Boeing mulls new 777X freighter as air cargo booms
* Air freight market highly dependent on global trade
* Risks include supply chain shortening, jet conversions
Nov 15 (Reuters) - A pandemic-driven boom in air cargo is
providing an auspicious backdrop for Airbus and Boeing to launch
new large freighters, but longer-term trends - particularly the
strength of the global economic rebound - will determine whether
Airbus bagged its first deal https://www.reuters.com/business/aerospace-defense/airbus-wins-air-lease-launch-order-a350-freighters-2021-11-15
for the freighter version of its A350 jetliner at the Dubai
Airshow on Monday - a model the European group hopes will break
Boeing's long-held dominance of the market to fly goods.
Boeing, meantime, is working on a potential freighter
variant of its 777X model, though has yet to announce a launch,
with possible buyers including major cargo player Qatar Airways.
After losing two years of air passenger growth to the
pandemic, the freighter market has been a rare bright spot for
planemakers, as a boom in online shopping, supply chain
disruptions, and a drop in passenger plane flights - which often
also carry cargo in their holds - has stoked demand.
But there are big risks associated with new models, which
would only be delivered in the second half of the decade.
These include a rapid recovery in passenger flights,
companies shifting to source more goods closer to home, and a
growing number of passenger jets being converted to freighters.
There is also huge uncertainty over the strength of the
economic recovery from the pandemic and the future of global
trade, which was in a slump before the pandemic due to
U.S.-China trade tensions that have not been resolved.
"It's not a risk-free decision," said Stuart Rubin, managing
director aviation at consulting firm ICF of Airbus and Boeing's
Neither company has disclosed the cost of developing the new
The shortage of passenger plane belly capacity during the
pandemic sent freight rates soaring, delayed retirements of
older models like MD-11s and had lessors rushing to convert
older unwanted passenger planes into carrying freight.
"Freight-wise, everyone with a plane could make money at the
moment," said Frederic Horst, managing director of Cargo Facts
Consulting. "We're seeing a lot of weird things going on that
you wouldn't normally see. You're seeing 737 narrowbody
freighters flying Europe to Asia."
Large widebody freighters like the proposed A350 and 777X
usually carry denser, trade-linked products like auto parts,
semiconductors and pharmaceuticals on long-haul routes from Asia
to North America and Europe.
Converted passenger planes instead carry lighter, more
voluminous cargo such as e-commerce packages.
Cargo companies like FedEx and major airlines such
as Korean Air Lines and Lufthansa have
also benefited from unprecedented disruptions to supply chains
and soaring container shipping rates during the health crisis.
Air transport last month was around four to six times as
expensive as sea freight, versus 12 to 15 times normally, said
Tom Sanderson, director of product marketing at Boeing.
There are grounds for thinking some of the pandemic-driven
boosts to air freight will continue.
Airbus, for example, forecasts the e-commerce market will
grow 4.7% per year over the next 20 years, compared with 2.7%
for general cargo.
"If you get a good price, ordering freighters in the current
market is not really audacious," said independent industry
adviser Bertrand Grabowski.
In the depths of the pandemic last year, Boeing, which
controls 90% of the freighter market, forecast the global large
widebody cargo fleet would rise to 850 planes in 2039 from 610
in 2019 due to growth in demand.
Environmental trends are also working in favour of new, more
Boeing's soon-to-be-discontinued 747-8, as well as the 777F
and 767F, cannot be produced after 2027 due to new environmental
standards unless product changes are made.
Boeing has said it may apply for exemptions to the rules as
one of several options under consideration for freight plans.
Yet, analysts say there are also signs some of the pandemic
benefits for air freight are starting to fade.
Container rates have begun to fall as supply chain
disruptions have eased and some companies bring production
closer to home to avoid future shocks.
European fashion companies are shifting manufacturing from
China to places like Portugal, Turkey and North Africa, said
Marco Bloemen, cargo advisory lead at Accenture's Seabury
The burgeoning market to convert 777 passenger planes into
freighters - such as the Israel Aerospace Industries (IAI) and
AerCap 777-300ER programme set to produce its first
freighter next year - could also limit demand for new models.
While the converted planes will not be able to carry denser
cargo as effectively as their newly built counterparts, they can
ride the boom in e-commerce, said ICF's Rubin.
Emirates on Monday signed a deal with IAI to convert four
777-300ERs into freighters, citing its ability to carry high
volumes of e-commerce as the key factor. The airline also
ordered two more factory built 777 freighters.
(Reporting by Jamie Freed in Sydney
Additional reporting by Eric M. Johnson and Tim Hepher
Editing by Mark Potter)