Air cargo leasing specialist Air Transport Services Group (ATSG) sees the Airbus A321 and A330 platforms as ideal complements and key contributors to future growth, even as the Boeing 767 remains the company’s flagship fleet type.
The company recently accelerated introduction plans of its first three converted A321ceos, with leasing arm Cargo Aircraft Management now slated to get the first two in service in 2022. ATSG also reserved 20 conversion slots for A330s at Elbe Flugzeugwerke GmbH (EFW) and is eyeing feedstock to fill them. “While the 767-300 will remain our primary midsized freighter growth engine for many years to come, we also see the A330 as an attractive platform with customer appeal and fleet synergies with the A321,” ATSG CEO Rich Corrado said on the company’s Aug. 6 earnings call. “We don’t anticipate investing in A330 feedstock until 2023. But we believe securing conversion slots to be a wise investment.”
The company ended June with 110 aircraft in service, including 56 767-300 freighters. Its lessees include Amazon Air and DHL. ATSG has 16 more of the venerable Boeing widebody freighters either awaiting conversion or re-lease and is receiving orders from customers for placements as far out as 2025.
While the 767s still have a decade or so of life at least, ATSG believes newer A330s will offer an attractive option when customers want to transition out of the Boeing widebodies.
“The A330-200 is about the same size as the 767-300,” Corrado said. “It’s a little bit more expensive feedstock and it’s got some higher operating costs because it’s a heavier airplane. It’s got great range, but it’s not something you need in an express environment.”
“The A330-300 is slightly bigger than the 767-300. It’s got about a 20% higher [cubic volume] and 8-10% higher weight carrying capability,” Corrado continued. “In the express environment, where these midrange freighters ... tend to be a solution for, [volume] is much more important than weight. So the A330-300 looks to be a real solid solution for the same customers that the 767 is providing service for today.” The A330s would bring another benefit—a common cockpit with the A321s—which could appeal to customers looking for a diverse fleet.
“What that means is small differences in training that’s needed to move a pilot between the A321 and the A330—much smaller than having to go get a full new type rating for a different aircraft type,” Corrado said. “There’s significant crew [cost] savings on the synergy with that.”
Widebody passenger demand is expected to steadily increase as travel restrictions prompted by the COVID-19 pandemic ease. But falling prices for some mid-life and older passenger models may not reverse course if demand does not bounce back quickly and operators look to integrate newer aircraft into their fleet plans.
“One of the other significant events that’s occurred as a result of the pandemic is feedstock values for the A330 have come down significantly,” Corrado said. “It depends on which appraiser you listen to, but pretty much the two or three that I’ve read is in the 25% range. That was one of the key things when we looked at the airplane.”
The EFW conversion slot commitments are not firm orders, but ATSG is confident they will be used.
“It’s a confidence statement about where we see the market demand over the long term,” Corrado said. “With the additional platforms we’ll have on top of the 767, we feel very comfortable that it’s a prudent commitment to make.”
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