Airbus Bullish on Lasting Cargo Prospects With Launch of New Freighter

Airbus has officially launched a freighter version of its A350 twin-engine aircraft, a sign that the airframer believes cargo demand will continue to grow and an acknowledgement that it is playing catch-up in this lucrative market with archrival Boeing.

Lessor Air Lease Corp. (ALC) is one of the new freighter’s first customers, announcing an order for seven A350Fs at the Dubai Airshow. That order is  part of the leasing giant’s 111-aircraft order Airbus order, which includes aircraft up and down Airbus’ product line. “We had the vision to be first adopters of the A321 and are convinced we have made the right choice again on the A220 and A350F, responding to what we see the market will need in the period of recovery ahead,” ALC Executive Chairman Steven Udvar-Hazy said. 

Airbus admitted in its second-quarter earnings call that Boeing dominated the air freighter sector. The U.S. airframer has a lineup that includes the 747-8F, 767F, and the 777F, while Airbus’ offerings were much more limited. At the time, Udvar-Hazy recommended that Boeing double down on the sector and capitalize on its advantage against Airbus. “Boeing needs to focus on that,” he said at the time.

Airbus in July announced the initial research and development on the A350F had begun, but with the announcement this week in Dubai, the manufacturer has officially launched the program. Airbus did not specify an entry-into-service date for the new aircraft. The A350F is expected to have a maximum structural take-off weight of 109 tons and is capable of flying fully-laden for 4,700 nautical miles — or Hong Kong to Moscow. The aircraft can reach 6,000 nautical miles — Hong Kong to Paris, for example —with its maximum volumetric weight of 92 tons, Airbus said.

“ALC’s endorsement confirms the global enthusiasm we see for this quantum leap in the freighter space and we applaud its insightfulness in selecting it and in beating everyone to the finish line for the first A350F order announcement,” said Christian Scherer, Airbus chief commercial officer. “It has seen the formidable value the A350F brings to the cargo market.”

Air cargo demand already is ahead of where it was pre-pandemic, fueled by a surge in online shopping that the industry now sees as a structural change in retail. This surge has contributed to the constraints of maritime shipping and is driving a modal shift toward air freight, especially now that the cost of air shipment is only about five times the cost of surface transport, versus 12 times costlier before the pandemic.

Airbus forecasts cargo demand between now and 2040 to grow by almost 3 percent per year for general freight and 5 percent annually for express, or package, freight. This will require a global fleet of 2,440 freighters, of which 880 are expected to be new-build aircraft. Boeing’s commercial market outlook predicts the world’s freighter fleet will by 70 percent larger in 2040 than it is now.

Boeing’s freighter orderbook also has grown this week, with orders including DHL’s for nine converted 767-300BCFs and Emirates’ order for two 777Fs. Icelease has ordered 11 737BCFs. The company is adding two additional 737 freighter conversion production lines in the UK and Canada, it said at the Dubai Airshow.

In addition to the A350Fs, ALC is ordering 25 A220-300s, 55 A321neos, 20 A321XLRs, and four A330neos.

The A220 order marks a divergence between lessors over the future needs of the world’s passenger airlines. ALC’s order for 25 A220s is a vote of confidence in the small narrowbody and makes ALC the largest lessor of the type. “After lengthy and detailed consultations with several dozen of our strategic airline customers around the world, we are focusing this comprehensive order on the most desirable and in demand aircraft types, covering the A220, A321neo, A330neo and A350 families,” Udvar-Hazy said.

But the world’s largest lessor, AerCap, is cool to the A220. CEO Aengus Kelly said the A220 is a “good airplane,” but will not drive airline fleet decisions. Instead, it may fill in some gaps on the low end of the market.

“The heart of the market is 160-220 seats,” Kelly said during the lessor’s third-quarter earnings call last week. The overwhelming majority of the global fleet is comprised of narrowbodies that fly 2.5-hour missions. “That ain’t going to change,” he said.