News / Air freighter conversion rate holding steady, but there is a 'risk of oversupply'

Aircraft passenger-to-freighter (P2F) conversions are continuing at a stable rate, but experts are keeping tabs on a potential oversupply scenario.

The latest freighter value analysis by aviation advisory firm IBA shows conversion rates progressing steadily. The B737-800 leads narrowbody conversions and IBA suggests this could be a record year, perhaps reaching 60 aircraft.

“It may even slightly exceed 60,” said Jonathan McDonald, manager – classic and cargo aircraft at IBA.

Just over 55 B737-800s were converted last year and it’s by far the most popular P2F programme. But Mr McDonald cautioned: “I don’t think you want to exceed that number because you’re just going to be creating potential for huge oversupply.”

IBA has spotted a few converted -800s publicly listed for sale and Mr McDonald suggested the aircraft were not being placed as quickly as they once were. And he warned: “Also, you run the risk of further softening the value and lease rates on them.”

The B737-700 and A320 converts will remain niche. he said, adding: “It is clear that the market is gearing up around the -800 and the A321. In fact, the A321 should present some significant opportunity in the future considering there’s still a large tranche of passenger A321s out there.”

Despite the considerable feedstock, Mr McDonald said not all A321s would be heading for conversion, as they must meet certain technical specifications and criteria to be suitable for P2F. However, as airlines replace their current generation A321s with the Neos, there is far more opportunity to convert them.

IBA suggests the B737-800 P2F fleet is on course to surpass the B757-200, but there is still some decent feedstock available for those. Icelandair, for instance, operates around 15 B757s which will be retired in 2026 and replaced by either A321 Neos or B737-9s.

Mr McDonald noted: “These new aircraft won’t arrive for a while, so the B757s might be too old for conversion by the time they finally come out of Icelandair. It’s a similar scenario at United.”

In the widebody sector, the B767-300ER conversions continue to far outpace A330-300P2Fs, and convertors like EFW have committed to a steady conversion rate to avoid oversupply, according to IBA.

“It’s not a criticism of the A330-300, but there is just a large stream of B767-300 conversions, although the feedstock is beginning to dry up.”

Mr McDonald sees enthusiasm growing for A330s. He said: “We have seen a lot of recent announcements for A330s, but these are just announcements to acquire them. The actual conversions will likely happen in 2024 or 2025. We see the A330 coming up quite substantially as time progresses.”

IBA expects to see the A330 conversion rate overtake B767s from, perhaps, 2026 – and definitely from 2027.

In January, Boeing delivered the last factory-built B747-8F, so industry chiefs will likely be looking for a possible replacement, especially one with nose-loading capability.

In the past few years, IBA has observed a recovery in value and lease rates on the B747-400/ERFs, it said, but the jury is out on whether the absence of nose-loading will impact any future demands. The average fleet is around 22 years old, but Mr McDonald said the good news is that a good chunk of the fleet is cf6 powered – “operators of the -400F, concerned about how to replace them, will see plenty of material still around to support that ageing fleet.”

For operators with deeper pockets looking to replace older B747 freighters, the likely solution for that sort of payload is the B777-F and A350F.