Amazon ASL airline orders more freighters converted to Boeing 737-800s
ASL Aviation Holdings announced on Thursday that it has placed an order with Boeing to convert up to 20 used 737-800 passenger planes to carry cargo, doubling down on a fleet modernization strategy to support the growth of customers such as ‘Amazon, FedEx and DHL.
The agreement covers 10 firm orders and options for 10 additional 737-800s. If the Dublin-based aviation services company exercises all purchase rights, it will eventually operate 40 of Boeing’s converted narrow-body freighters. The new aircraft will be awarded to ASL’s airlines in Ireland, Belgium and France in Europe, as well as Thailand-based joint venture K-Mile.
ASL has received 11 of the 20 passenger-cargo modifications previously ordered from Boeing, with two more being converted and the remaining seven scheduled to enter service between summer and early 2023.
The influx of small freighters has been a major reason for Amazon Air’s increased flight activity in Europe since mid-2021, DePaul University researchers recently reported. ASL Airlines Belgium and ASL Airlines France fly several aircraft under Amazon (NASDAQ: AMZN) mark and provide additional airlift as required with own-registered aircraft used for multiple customers.
The 737-800 is popular with regional cargo airlines for its best payload — 52,800 pounds with a range of 2,025 nautical miles — and reliability. It also has lower fuel burn and operating costs per flight than conventional 737 freighters.
Airplanes are well suited for fast shuttles with express networks as they can be filled and returned quickly. Flying larger planes that are partially empty or have to wait longer for enough cargo is uneconomical for highly repetitive routes. ASL airlines primarily use the aircraft to transport express cargo and e-commerce shipments.
“The aircraft has proven to be a perfect fit for our customers’ needs and the operational requirements of our European network of 100 airports,” said ASL Aviation CEO Dave Andrews.
Boeing (NYSE: BA) said the airframe modifications – removal of the interior, a large cargo door, reinforced floor and wing boxes to support heavy containers, a rigid cockpit barrier and a roller system for loading – will be carried out by Taikoo (Shandong) Aircraft Engineering Company Ltd. Authorized Overhaul Specialists, Jinan, China, and Boeing’s new facilities at London Gatwick Airport.
Conversions are expected to begin in the second quarter of 2023, when the existing backlog will be absorbed.
ASL hasn’t disclosed whether it intends to lease or buy the 737-800s, but in April 2021 it opened a credit facility with Goldman Sachs that would allow it to borrow up to $125 million. dollars to buy the initial slice of planes and send them to Boeing for conversion.
A 737-800 freighter rebuild costs between $4 million and $6 million. Used planes fetch about $13 million in the secondary market, according to industry appraisers.
Conversion houses are busier than ever – reconfiguring passenger aircraft for main deck cargo operations. Demand is high due to strong global economic growth, the slow recovery of passenger airlines from the COVID pandemic, widespread ocean freight congestion and delays, and the rise of e-commerce. About 112 737-800s have been turned into freighters since Boeing launched its program four years ago and industry analyst Steve Fortune recently predicted more than 80 units could be produced in 2022.
He warned that there could soon be excess capacity in the narrow freighter category if air cargo volumes decline. Others say e-commerce will keep production at record highs even as the market downturn dampens the construction frenzy.
More FreightWaves/American Shipper stories by Eric Kulisch.
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