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Farnborough: Boeing, Volga-Dnepr Group Confirm Acquisition of 20 747-8 Freighters

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Farnborough: Boeing, Volga-Dnepr Group Confirm Acquisition of 20 747-8 Freighters

Farnborough: Boeing, Volga-Dnepr Group Confirm Acquisition of 20 747-8 Freighters
July 12
17:14 2016

LONDON — Volga-Dnepr Group announced Tuesday at the Farnborough Airshow that it had finalized terms for its order of 20 Boeing 747-8 Freighters, also agreeing to a long term deal for the group to provide logistics support for Boeing Commercial Airplanes.

Volga-Dnepr’s cargo airline subsidiaries Volga-Dnepr Airlines and AirBridgeCargo Airlines have already taken delivery of four out of the 20 ordered airplanes and operate a further four 747-8Fs from a previous order. Deliveries will be spread over the next six years.

Volga-Dnepr gets a necessary deal done despite geopolitical overhang

The cargo airline group, headquartered in Ulyanovsk, Russia, is a market “leader in the unique, oversize and heavy cargo” space. This makes large wide body freighters like the 747 and Antonov An-124 an operational necessity, and accordingly the 747-8F is a strong fit for Volga-Dnepr’s fleet.

The Group has 41 dedicated freighter aircraft in its fleet including 17 (12 Antonov An-124s [3 on order], and 5 Ilyushin IL-76TD-90VD) with the parent Volga-Dnepr Airlines, which has hubs at secondary Russian airports like Krasnoyarsk along with its main base in Ulyanovsk operating on a charter model.

AirBridgeCargo is the primary scheduled cargo carrier in the group, with hubs at Sheremetyevo and Domodedovo in Moscow and a worldwide long haul network with service to the United States, Asia, and Europe. AirBridgeCargo’s fleet includes 18 aircraft (8 747-8Fs, 9 Boeing 747-400 freighters, and one Boeing 737-400SF).

The group also includes ATRAN Airlines, a subsidiary based at Moscow Vunkovo and Sheremetyevo that operates scheduled flights with three aged Antonov An-12 turboprops and 2 Boeing 737-400SFs. And it recently opened CargoLogicAir, a subsidiary based at London Stansted and offering a mix of scheduled and charter service since January 2016 with one Boeing 747-400F and a 747-8F due before the end of this month.

As a Russian carrier primarily transacting in cargo involved with Russian industrial projects, Volga-Dnepr is more sensitive than most to the current geopolitical woes that have depressed international passenger and cargo volumes from Russia over the past two years.

The group specializes in carrying heavy cargo, which naturally includes machinery and other supplies for the oil industry, and accordingly has suffered in the wake of depressed oil prices worldwide. But in spite of potential concerns tied to the economic sanctions that have roiled Russian purchases of foreign products, Volga-Dnepr and Boeing got a deal done.

Volga-Dnepr doesn’t fix Boeing’s 747-8 production gap(s)

The headlines after the Volga-Dnepr order was announced last year, frequently proclaimed that the order “saved” the 747-8 production line. With 16 outstanding orders, and a current production rate of 0.5 aircraft per month or six aircraft per year, the Volga-Dnepr order theoretically fills 2.7 years worth of production for the 747-8.

However, with the order spread over 6 years, in practice the Volga-Dnepr order will fill less than half of each year’s production (2.7 aircraft per year).

Boeing has won 136 orders for the 747-8i and 747-8F (51 for the 747-8i and 85 for the 747-8F) and delivered 103 aircraft to date. The backlog includes 33 aircraft (4 from Transaero that are offset by 4 new potential orders from Iran Air for 33 net), but those deliveries are split over the next eight years.

This leaves Boeing with production gaps to fill in several years including 2017 and 2018. Volga-Dnepr’s deliveries, we understand, don’t fill out even those two years.

The broad takeaway is that this doesn’t “save” the 747-8 from its production gaps, and Boeing will still need to find orders from existing or new customers. One can imagine that certain carriers, for example Air China, would top up existing passenger fleets with air travel volumes exploding.

Conversely with the global cargo market in the doldrums, finding additional freighter orders will be difficult. The air cargo market is suffering from a megatrend towards smaller cargo that can fit in the belly of passenger aircraft, and that may depress even the future market for dedicated freighter aircraft.


About Author

Vinay Bhaskara

Vinay Bhaskara

Senior Business Analyst, Big Airline Enthusiast, Avid Airport Connoisseur, Frequent Flyer, Globetrotter. I Miss Northwest Airlines Every Day. @TheABVinay

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1 Comment

  1. Gennadius
    Gennadius July 12, 20:12

    Volga-Dnepr did not have a previous 4 frame order. They have a previous 5 frame order, which was the original one that they placed. Those direct orders finished delivery in 2013.

    They had a single order in late 2014, and then 2 more in late 2015 after the Paris MoU was announced in mid 2015. Beyond that, there is the CargoLogicAir frame that is currently on static display at FIA.

    Originally, I thought the presser was incorrect in saying that 4 were already delivered. I thought it should read 4 were already firmly ordered, the 2 from 2015 after the PAS, and the 2 that were half of the 4 unidentified orders from back in March of this year, one of which is the CargoLogicAir frame. That would mean that they had 3 delivered and 4 firmly ordered from the 2015 MoU.

    However, on further reflection, it is possible that they are counting the 2014 frame (which was their 6th frame) as part of the PAS MoU. If that is the case, then they have indeed taken delivery of 4 frames, and have previously firmed 5 of the 20 orders.

    In either case, it is good news for the line, as it does account for 17 new frames, 1 of which was being potentially delivered in 2014. With deliveries spread out, they will need to find some more orders, however they already have 2 from earlier this year which are likely going to Atlas Air. Cargolux has also talked quite a bit about ordering more, in fact they were supposedly in talks for a 5 frame order many months ago, but that has yet to come about.

    It would be nice to see additional passenger orders, unfortunately, unless something dramatic changes like another PiP of some kind, that will be a much tougher get for Boeing. Air China is likely, perhaps some other Chinese airlines as their older 747s need to be replaced. Iran may take more than the 4 they have indicated, and Lufthansa has long been rumored to be taking at least 1 more. Perhaps they will top up with more than 1 if they see the need for some immediate lift. Turkish has always been on-again, off-again with respect to ordering either the 747-8 or 380, but that would be a nice order if it eventually came to pass for the 747-8i.

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