PARIS — The narrow-body freighter market just got a bit more competitive. Airbus and ST Aerospace, through their joint venture EFW, announced a passenger to freighter conversion program for the A320 and A321 models with an expectation of delivery to customers starting in 2018. The group sees a market of up to 600 conversions over the life of the project making it a viable and hopefully profitable endeavor.
This is not the first time such a program has been attempted; the prior effort was abandoned without ever going into production. Tom Williams, Airbus COO, speaking at the announcement press conference here acknowledged the failures of that effort, noting that Airbus was aiming to solve every problem and every scenario.
That ultimately created an over-engineered solution which was too expensive to produce. There was also question around the timing of the conversions relative to the aircraft age; many were considered too young to pull out of passenger service – especially with the high conversion costs – to make a freighter version financially viable. Some years on now the residual value of the older A320 and A321 aircraft is lower, resulting to what the company believes is a sweet spot in the market.
Williams also spoke to the importance of the P2F option for the overall program. “It really helps us in selling new aircraft and managing residual value,” he said. And with the recent significant boom in production pace that residual value factor is more significant than ever.
Finding secondary market customers for passenger use is getting harder; by adding the freighter option into the operation, a new resale market opens. Then again, with a target market of only 600 conversions, it is not clear that future sales will truly be helped by this move.
Primary markets for these conversions are the United States and China. To that end, ST Aerospace will be enabling its facilities in those locations to perform the conversions in addition to the operations in Singapore and Dresden, Germany.