MAX Problems Force Return To -400s In Cargo Conversion Market

The prolonged MAX agony continues to ripple through many sectors of aviation, including the supply of freighters. 2019 was a slow year in narrowbody cargo-conversion markets, acknowledges Robert Convey, senior vice president of Aeronautical Engineers. “It was a feedstock issue,” Convey says.

Customers expected in 2019 to shift from converting Boeing 737CLs to converting NGs, but could not obtain NGs affordably due to the MAX grounding. “They were hesitant to go back to Classics.”

In 2020, given the continued grounding of MAXs, Convey says customers are going back to converting NGs. He had expected two-to-four conversions of 737-400s, but it is looking like the company will do about ten by yearend.

The return to -400s may last into 2021, Convey predicts, though there are not many left. And he expects the MAX ground will still be impacting the conversion market for three to five years. “It will take another two years to get all regulatory approvals for the MAX’s return, the stored MAXs back into service and for airlines to start releasing their -800s in any real volume,” Convey says. “The airlines have been burned by Boeing and they will be cautious.” And the NG jet will be pricey, due to its popular CFM56-7B engine. 
ST Engineering and Elbe Flugzeugwerke have a new Airbus A321 conversion in the market, but Convey sees it as a competitor to 757 conversions due to the A321’s size.

EFW is also working on a conversion of the A320, but this aircraft may suffer from the same problem as the NG. “Airlines are not letting them go,” Convey says.

The MAX grounding has affected all narrowbody markets, not just those for Boeing products.

But will the Corona virus soften demand for conversions, as the MAX has softened feedstock supply? Convey expects cargo demand will be weak in Southeast Asia, and may or may not be in the rest of the world as the virus goes abroad. “Who knows, people may stay at home, and order things online that have to be delivered.”

A few companies like Amazon can afford to convert the scarce and expensive -800s, but Convey expects most cargo carriers to seek the -400 for quite a while.

“They can grab a -400 now, then in five years hope for an -800.” This demand for the older jet is pushing prices up, but only by about $1 million, versus a $15 million premium for the -800.