Trans-Atlantic Rivalry Brews Over Airbus A321 Converted Freighter

A second manufacturer is gearing up to produce Airbus A321 converted freighters in the U.S. this summer, taking on a European engineering firm that is gaining sales momentum eight months after entering the market in the single-aisle freighter segment where the Boeing 737-800 has a three-year head start. 

The two companies will compete head-to-head as well as against the Boeing product. Aviation experts say the A321 is highly desirable for express delivery and regional air cargo operations. 

On Thursday, Dublin-based leasing company GTLK Europe ordered four aircraft reconfigured to carry cargo on the main deck, Elbe Flugzeugwerke, the company doing the work, announced. EFW is scheduled to convert three of the aircraft this year and the fourth in 2022.

Dresden, Germany-based EFW, a joint venture between Airbus and Singapore's ST Engineering, recently opened a second assembly line in China and said it plans to open another one in the U.S. this year. It has already delivered three of the aircraft — one each to Titan Airways, Qantas Freight and Latvia-based SmartLynx Airlines. The Qantas and SmartLynx planes are hauling packages for Australia Post and DHL Express, respectively.

At least 17 A321 passenger-to-freighter conversions have been ordered by leasing companies Vallair, BBAM and GTLK so far. 

321 Precision Conversions, a U.S. joint venture between Precision Aircraft Solutions and publicly listed leasor and air cargo carrier Air Transport Services Group ATSG, two weeks ago received U.S. Federal Aviation Administration certification for its A321-200 design modification, marking the completion of a three-year development program.

ATSG subsidiary PEMCO, a conversion facility in Tampa, Florida, is starting up a production line and expects to begin work on its first A321 in June, Chief Executive Rich Corrado said Thursday in an earnings call with analysts. 

Avocet Aviation in Sanford, Florida, will also be a designated conversion site, Zachary Young, director of sales for 321 PC confirmed.

Joint venture officials have previously indicated the customer for the first aircraft is Luxembourg-based aircraft leasing and services firm Vallair. Young said the PEMCO and Avocet facilities each have one A321 parked on site ready to be inducted for conversion in June.

ATSG will make money through 321 Precision Conversions selling the conversion kits and royalties for the supplemental type certificate, as well as PEMCO's engineering work. 

The company plans to procure A321s through its Cargo Aircraft Management arm, convert them itself at PEMCO and lease them to express carriers and other customers, such as Amazon Air AMZN and DHL DPW. The  A321 will supplement the rental opportunities ATSG currently enjoys with Boeing 767 converted freighters. Its business model is to wrap services — crew operations, maintenance, ground handling — around leased aircraft for customers that want a turnkey product. Officials say the model diversifies the revenue stream and makes customers stickier than if they simply lease an asset.

The A321 presents a broader opportunity for ATSG because it shares in the supplemental type certificate and can also do the touch-labor conversion, which isn't the case with the 767, Corrado explained at an investor conference in March. Israel Aircraft Industries does the 767 conversions for ATSG.

Narrow-body cargo jets are in high demand from express and postal operators contending with rising package volumes as e-commerce grows in popularity. Boeing BA this week opened another production line to convert 737-800s in Costa Rica.   

"The A321 is a fantastic airplane for express operators. It can compete with both the 737-800 and offers a great opportunity for replacement in the 757-200, which up until about a year and a half ago, was the most prolific express aircraft in the networks of the large FedEx, DHL express operators," Corrado said.

The A321 converted freighter is the first in the narrow-body class to offer containerized loading on both the main and lower decks. It has a payload of about 61,800 pounds and a range of more than 2,300 nautical miles. The 737-800 can only fit loose cargo in the belly hold. 

Aviation specialists expect plentiful supply of relatively new, affordable A321s to be available for conversion after airlines downsized in response to lower passenger demand and retired many of the aircraft sooner than planned, with many shifting to the newer, more fuel-efficient A320neo. 

321 Precision Conversions and EFW have already been chirping at each other, with 321 PC saying its version features the lowest operating empty weight, more standard range and payload, better crew amenities, and a better cargo door design and cargo handling system. For its part, EFW claims it has an advantage in life-cycle value and maintenance because it is the original equipment manufacturer. It also contends it's version has a better center-of-gravity and coverage for all weight variants of the A321.

Corrado said ATSG is negotiating to procure some A321s and hopes to convert three or four in 2022.

"We view the plane as a great replacement for the 757 as that plane gets up there in terms of age. Very efficient; we also think it's a good upsell from the 737-800 and we think it's a global airplane," ATSG Chief Commercial Officer Mike Berger said at the investor presentation. "We think the airplane has application in the U.S. and North America, but very much so in Europe as well as Southeast Asia, India, etc. So the airplane can be utilized, based on the size of it, in a number of different ways as the market evolves and some other airplanes age. 

"And certainly from a geographic standpoint it sets up very nicely to service markets across the globe," he said.

China-based Sine Draco Aviation Technology is also developing an A321-200 passenger-to-freighter conversion program and could receive regulatory approval in the next year.

737-800 EU Mod

Meanwhile, Miami-based Aeronautical Engineers Inc., announced Friday the European Union Aviation Safety Agency has signed off on its proprietary design for retrofitting the Boeing 737-800. The certification will allow AEI, which developed its own conversion kit separate from Boeing's program, to convert aircraft for use in Europe.

AEI said it has received multiple expressions of interest for the 737-800 conversion from potential European customers.

The AEI converted 737-800 freighter offers a main deck payload of up to 52,700 pounds, with 11 full-height container positions plus room for a smaller container. Modifications include installation of a main cargo door, a cockpit barrier and reinforced floor beams.

Since November, AEI has secured 40 orders for the B737-800SF. AEI has 14 simultaneous freighter conversion production lines at licensed partners, nine of which are dedicated to the 737-800 freighter. The company said it is on track to deliver 24 various freighters in 2021 and more than 30 in 2022.

Click here for more FreightWaves/American Shipper stories by Eric Kulisch.

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