Cargojet to Sell Two Boeing 777 Aircraft, Defer Conversions

DALLAS — On Monday, Ontario-based Cargojet (W8) announced that it plans to sell two Boeing 777-300 aircraft that were originally meant to be converted into freighters, and also that it has postponed orders for other large-aircraft modifications in order to conserve cash due to the weak global economy that has caused a decrease in demand for shipping goods.

The Canadian freighter airline based its decision on lower growth-rate forecasts from the US Federal Reserve, World Bank, and Bank of Canada. W8 would be one of the first airlines to deploy passenger-to-freighter Boeing 777-300’s.

According to freightwaves.com, the all-cargo carrier, which reported a CA$16.3m (US$12m) decline in gross margin for Q4 because the normal year-end bump in shipping volumes didn’t materialize, said "it expects to finalize the Boeing 777-300 sale early this quarter for US$53.5m and defer the delivery of two more 777-300s to help weather the current economic downturn. It didn’t disclose who will buy the aircraft."

By switching to the Triple Sevens, W8's capacity will increase, meaning fewer flights would be enough for the same amount of freight. The carrier had been planning to introduce eight Boeing 777s to expand its international charter reach and reinforce its domestic network.

Cargojet allocated four Boeing 777-200s to serve as part of a strategic pact with DHL Group agreed upon in March last year. DHL will be the launch customer of the type. Conversion of these four aircraft will continue, and W8 says it will take delivery over 2024-25 as planned.

As passenger airlines retire B-777 to move up to B-787 aircraft, the feedstock market for B-777 is expected to remain strong, allowing Cargojet to initially divest its feedstock of B-777s freeing up liquidity immediately,

Cargojet

The airline also states that it is deferring the conversion of two Boeing 767-200s from 2023 to 2024, in order to preserve capital further.

Cargojet disclosed the conversion deferrals as it released full-year financial results showing it generated pre-tax earnings of C$220m (US$161m) on revenues of C$980m.

Fleet Analysis

Cargojet's fleet contains 16 Boeing 757 Freighters, 23 Boeing 767 Freighters, and three Boeing 777-300ERs. However, only 36 of them are active, the rest is stored. - according to Planespotters.net.

Some of their planes are operated for other cargo airlines, like DHL and Amazon’s Prime Air.

The airline says it has open purchase agreements to acquire four fully-converted Boeing 757s and has agreed to lease a converted 767-300 – with a purchase option – in the second quarter. The airline adds that it has conversion slots reserved for a number of other 757s and 767s in its fleet.

The 777-300ERSF Conversion Story

In October 2019, GE Capital Aviation Services (GECAS) and Israeli Aerospace (IAI) announced the launch of the Boeing 777-300ERSF, the passenger-to-freighter program.

GECAS and IAI’s partnership continues together. IAI has completed several conversions from passenger to cargo from Boeing 737 Classics, 737NGs, 747s, and 767s. They have 20+ years of partnership together with GECAS. IAI did 70+ conversions of GECAS aircraft.

We are excited to join IAI in this program. Their proven experience, knowledge, and unique engineering skill and resources in passenger to freighter conversions — combined with our working relationship with IAI stretching back into the 1990’s —gives us the confidence to co-fund the STC Development and commit to the Program as the Launch Customer of the B777-300ERSF.

Richard Greener, SVP and Manager of GECAS Cargo

To read more about the conversion project, check out GE’s website.

Cargojet was founded in 2002. It operates cargo flights inside its base country and internationally. It had recently ordered two Boeing 777-300s to convert to freighters.

Featured image: Cargojet C-FCCJ Boeing 767-323(ER)(BDSF). Photo: Michal Mendyk/Airways