News / Volga-Dnepr leaseback deal brings three new 777Fs, despite market turbulence

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One year after Volga-Dnepr Group signed what many believed was, at best, an optimistic letter of intent with Boeing for 29 777 freighters for its Cargologicair arm, comes the news that three of the aircraft type will enter AirBridgeCargo’s fleet next year. 

The carrier has entered a purchase and leaseback deal with Dubai Aerospace Enterprise (DAE) for three factory-fresh 777 freighters. 

As one source noted: “It’s a standard way of doing things, negotiate with Boeing and then get someone else to buy the aircraft. It’s the best of both worlds for an airline.

“Boeing understands and works with the airline to get the best possible deal and aircraft specifications and benefits, and the ultimate leasing company gets the ownership and financial benefits of the leaseback.”

The news comes at a time when the air freight market is extremely soft, and several sources have indicated that Volga-Dnepr is scaling back costs after a tough first quarter – and things do not appear to have improved in the second. The group also faces additional costs for fleet expansion, which are coming during a difficult period. 

One supplier said there had been recently been changes in its UK company, CargologicManagement, which had resulted in a number of job losses, but this has not been confirmed.  

Volga-Dnepr is also facing complications with its AN-124 fleet, from both Russia and Ukraine. However, it appears that no countries have listened to a Ukraine court’s request that five of its AN-124s be seized, while the group itself claims the court ruling was unlawful.

Meanwhile, yesterday’s press release from Volga-Dnepr, which said it had signed an MoU with Leipzig-Halle, promising investment of up to €500m and the possible creation of 500 jobs, was dismissed as hope, rather than reality, by two sources. The release added that from the end of 2021 the group would operate 20 weekly flights at the airport, going up to 50 by 2030.

While VD is facing political difficulties, unrelated to its business, the soft market is likely to have ramifications for several freighter operators.

Some, like Kalitta and Atlas, have long-term contracts with express operators or the military, while others, such as Cargolux, ABC and Nippon Cargo Airlines, may have found this year tougher. But as one airline executive noted: “It’s always the same in air freight, you have to be cost-conscious in the good times to get through the bad. But something unexpected will come, and the market will pick up. It always does.” 

Perhaps IMO 2020 will be the answer to air freight’s woes.

Meanwhile, Volga-Dnepr Technics said last month it had secured approval from Bermudan regulators, where much of the Russian airline fleet is listed, to service 777-200s and –300s.