News / Supply chain issues hold back pace of freighter conversions

Boeing wants to turn more used passenger planes into freighters, but supply chain issues could impede those ambitions.

Over the course of the pandemic Boeing has drastically ramped up its freighter conversion programme. Since March 2020 the number of conversion lines it is running globally has jumped from 12 to 22. The majority – 17 of them – are turning out 737 cargo planes, while the other five are working on 767s.

Freighter conversion providers have been running flat out, with bookings extending as far ahead as two years, but this is still not enough to meet the clamour for cargo planes. Passenger traffic has been slower than anticipated to recover, leaving international belly capacity well below pre-Covid levels, particularly on the longhaul sectors from Asia to Europe and the Americas. Meanwhile, e-commerce is fuelling rampant demand for narrowbody freighters.

Boeing wants to expand its conversion capacity further, said Ted Colbert, the head of the company’s global services division, in an interview with Bloomberg at the Singapore Airshow this week. He pointed to Asia, where he sees strong demand.

Those plans could be hindered by supply chain problems that have plagued conversion outfits in recent months. Wolfgang Schmid, vice-president sales & marketing of EFW-Elbe Flugzeugwerke, noted that there have been problems all the way from raw materials to loss of capacity due to Covid.

“We’re struggling with the supply chain, as [is] everybody,” said Rafi Matalon, vice-president and general manager of marketing of Israel Aerospace Industries.

Parts like sensors and smoke detectors have encountered bottlenecks, reported Bob Convey, vice-president of sales & marketing at Aeronautical Engineers Inc. (AEI). For barriers and loading systems there is a backlog of nine to 10 months.

He said this backlog is not a problem at this point, as AEI’s lines are booked out for two years. “We’re planning for that. Loading systems and barriers are installed at the end of the conversion process,” he added.

Supply chain problems are not confined to conversion providers; the whole aircraft industry has been affected. Plane makers signalled supply chain strains last September, notably shortages of semiconductors and plastics.

According to some observers, aviation supply chains were already vulnerable before the pandemic. For cost reasons manufacturers and maintenance, repair and operations providers had reduced parts inventories and struck a lot of single-provider agreements. The pandemic fully exposed these vulnerabilities, and the ensuing problems were further exacerbated by a shortage of skilled labour – another pre-Covid issue that worsened significantly in the past two years.

The problems could be worse if new aircraft production were to return quickly to pre-pandemic levels, and this would hugely increase the strain on overburdened supply chains.

Manufacturers are struggling to remedy the situation. Embraer has raised inventory levels at local warehouses to diminish the impact of supply chain disruptions. Companies have also been trying to strike up more multi-vendor agreements, but getting new vendors qualified is time-consuming.

For AEI the situation has been challenging but not overly disruptive. “It’s a challenge, but we’re not having serious issues,” Mr Convey said.

However, the company has shifted down a gear in its plans to add one or two more conversion lines. Management was looking to Europe for a move later this year but decided to wait because of another supply issue. Conversion kits are in tight supply, forcing conversion firms to run hand-to-mouth in this respect.

“It comes down to kits. We don’t want to add a line as long as we have not secured our kit supply. We don’t want to impact our work for our existing customers,” Mr Convey said.