Lufthansa Cargo will be the second customer for Boeing’s next-generation freighter, the 777-8, after making the greatest investment in company history on Monday, with an order for ten huge cargo jets that will expand capacity by two-thirds over the next decade.
Down a notch, Embraer announced the first sale of converted E190 regional jets to Nordic Aviation Capital, which would ship 10 passenger aircraft from its fleet to Brazil for modification.
The moves demonstrate suppliers’ and operators’ confidence in the air freight market’s ongoing expansion beyond the pandemic-fueled boom of the last two years.
Deutsche Lufthansa Cargo announced it will buy three current-model 777 freighters and seven 777-8s to address short- and medium-term demand. The German flag carrier also said that it is extending leases on two existing Boeing 777 cargo planes, which are set to expire in 2024, for another seven years.
The multi-pronged strategy includes purchasing one used freighter as early as July and placing orders with Boeing for two factory-built 777s. Boeing will also construct the seven 777-8s, which are expected to be delivered between 2027 and 2030.
With a solid order for 20 aircraft, Lufthansa (DXE: LHA) is also the launch client for the passenger version of the technically improved 777, now known as the 777-9. During its development, the plane was known as the 777-X.
Lufthansa Cargo, one of the world’s top 15 cargo carriers, now handles 15 777 freighters, four of which are operated by DHL Express joint venture AeroLogic. It also began using two Airbus A321 converted freighters this spring, a narrowbody aircraft that aviation engineering firms only recently offered to the market. The cargo airline also handles booking and handling for shipments transported by the parent company’s extensive global passenger network, as well as by Lufthansa subsidiaries Austrian Airlines, Brussels Airlines, and Eurowings Discover.
The German carrier’s purchase of the 777-8 rekindles interest in the product following Boeing’s (NYSE: BA) huge agreement with Qatar Airways in late January. Airbus unveiled an A350 freighter type based on its popular widebody passenger aircraft last year, and it has received 29 orders and preliminary commitments from five carriers since November.
Boeing announced last month that delivery of the 777-9 will be delayed until 2025, more than a year later than projected, and that manufacturing will be halted until the end of this year after reassessing how long it will take to achieve certification criteria. The production halt is intended to avoid inventory building, which could necessitate revisions based on final certification, but it will add $1.2 billion to the project’s cost. Boeing previously deducted $6.5 billion from the 777X program due to development issues. The plane is five years behind schedule, according to Boeing.
Air Lease Corp. (NYSE: AL) Executive Chairman Steven Udvar-Hazy stated at an airline industry conference in Dublin on Monday that the business opted against purchasing the 777X because there are too many uncertainties and delays with the program. Instead, it became the A350 freighter’s first customer. Separately, CEO John Plueger stated that Air Lease Corp. got inquiries about the availability of the A350 freighter from two airlines interested in the 777-X.
Boeing stated that the suspension in 777-9 manufacturing allows for additional 777 cargo capacity to begin this year. Boeing is required by international pollution laws to cease production of the current 777 version in 2027.
The additional 777s will join Lufthansa’s fleet of large freight planes. According to company officials, cargo capacity, fuel efficiency, and retaining a single fleet type were all important factors in Lufthansa’s investment choice.
As part of its fleet modernization efforts, Lufthansa ordered seven 787-9 passenger jets. Boeing decided to accelerate production in order to compensate for the 777-9 delays. Net capital expenditures will be around $2.6 billion through 2024 as a result of the new investments.
According to Boeing, the 777-8 has a payload capacity comparable to a 747-400 freighter while improving fuel efficiency, emissions, and operating costs by 25%. It will also feature 17 percent more cargo volume than the legacy 777 freighters, as well as a 15% fuel savings. A new carbon-fiber composite wing and fuel-efficient GE engines are among the technological advancements. The 777-8’s range of 4,410 nautical miles will let airlines to make fewer stops and lower landing fees on long-haul trips.
“These significant investments in Lufthansa Cargo are a reflection of confidence in the future development of the airfreight sector and the role that Lufthansa Cargo will continue to play in it,” CEO Dorothea von Boxberg said in a news release announcing the fleet update.
According to the 2021 Boeing Commercial Market Outlook, the global freighter fleet would grow by 70% by 2040, including about 450 new big widebody freighters.
Embraer receives its first cargo order
Meanwhile, Nordic Aviation Capital, which specializes in leasing regional aircraft, revealed Monday that it has agreed in principle to accept up to ten manufacturing slots for converting the E190/E195 jet to a freighter. The first delivery will take place in 2024.
Passenger-to-freighter conversions, according to Nordic Aviation, are a new component of its portfolio strategy, allowing it to continue collecting investment returns by prolonging the usable life of older aircraft.
In early March, Embraer initiated the E-Jet conversion program. Over the next 20 years, the Brazilian aircraft manufacturer anticipates a market of approximately 700 aircraft that might be modified for dedicated cargo duty. It claims that a number of E190/195 aircraft from 10 to 15 years old are already suitable for cargo conversion.
“There is tremendous demand for airfreight, particularly for same-day delivery and decentralized operations, which is the ideal mission for E-Jet-sized freighters,” Embraer President and CEO Johann Bourdais stated.
According to Embraer, the E-Jet freighters will bridge the gap in the freighter market between turboprops and narrowbodies like the 737 and A321. The E-Jet has half the volume and three times the range of big freight turboprops, as well as up to 30% cheaper operating costs than regular jets.
The installation of a wide main deck front cargo door, reinforced flooring, a protective screen behind the cockpit, a smoke detection system and fire extinguishers in the upper compartment, and a cargo handling system will be among the adaptations.
The E190F can carry up to 23,600 pounds, whereas the E195F can carry up to 27,100 pounds.
Embraer is the most recent aircraft manufacturer to develop a cargo program. Textron began manufacturing the Cessna SkyCourier big turboprop freighter and announced its first delivery to FedEx Express (NYSE: FDX) on Monday, May 9th, in addition to the new Boeing and Airbus freighters.
