- IAI, Etihad ink Boeing 777-300ER P2F deal.
- De Havilland union sniffs kerosene.
Aug. 30, 2021, ©Leeham News: The agreement last week between IAI and Etihad Airways to open a Boeing 777-300ER P2F conversion line in Abu Dhabi gives a major boost to the burgeoning program.
By Scott Hamilton
In addition to the history-making tie-up between an Israeli company and the United Arad Emirates, and a commitment by Etihad to convert 777s to freighters with IAI, the move is a major coup for IAI to win other Arab airline business.
IAI and the former GECAS, which was acquired by AerCap, launched the first 777 P2F program in 2019. GECAS ordered 15 conversions of the -300ER and optioned 15 more.
Middle East Airlines
The “Big Three” Middle East airlines, Emirates, Etihad, and Qatar, each have a large 777-300ER fleet. Each also has dedicated cargo operations, centered on new-build 777-200LRFs. With long-haul travel remaining depressed due to the COVID pandemic, the Big Three grounded Airbus A380s. Only Emirates is returning these to service. The Big Three also have surplus 777-300ERs. Emirates previously indicated it was planning to convert some to freighters.
With IAI and Etihad establishing a conversion line in Abu Dhabi, Emirates—also a United Arab Emirates carrier—is likely to convert its -300ERFs in its home country. If so, this would be a blow to other companies planning 777 P2F programs, Sequoia Aircraft Conversions-National Institute for Aviation Research at Wichita State University and Mammoth777. IAI and Etihad will establish two conversion lines, opening in 2023. Industry sources indicate this will bring IAI’s capacity for 777 conversions to 15/yr. Bloomberg reported that IAI sees a conversion market of 150 777-300ER P2Fs over five years. IAI may open additional conversion lines.
IAI and Etihad announced they will convert an undisclosed number of 777-300ERs to freighters.
Solidifying its lead
The IAI-GECAS deal called for first deliveries in 2023, four years after the program was launched. Adding two conversion lines and the head start over the newer programs means IAI can fulfill more orders before the other companies can develop and certify their conversions.
There is more than enough feedstock already. And Air New Zealand announced last week that it will retire all its -300ERs from service within this decade. (The -200ERs are already retired.)
Union rhetoric at De Havilland
Unions have their useful purpose, helping offset abusive and dumb management decisions. But unions aren’t above being dumb as well.
The latest case-in-point is the union that builds Bombardier and later De Havilland Dash 8s, including the most recent, the Dash 8-400.
The union seems to think there is a future for the Dash 8 if only the production is retained in the Ontario province. The reality is that there may be no future for the Dash 8 at all.
Even before the COVID pandemic, the -400 (nee Q400 under Bombardier) was hanging on only by its flaps. The program suffered under Bombardier’s neglect while resources—cash and people—were diverted to the development of the C Series and two corporate aircraft. Bombardier said publicly it lost money on every Q400 built (as well as CRJ). The backlog was on a steady decline. ATR, the only rival in the Western world, built up to an 85% share of the global backlog.
Losses had many causes, including low-rate production and a supply chain that charged for its costs but not for Bombardier’s profits. But decades of labor costs in expensive Toronto didn’t help.
Avoiding bankruptcy
To stave off bankruptcy, Bombardier sold the Q400 program to Longview Aviation Capital. Longview previously bought the old, old de Havilland programs from Bombardier: The Beaver and Otters and would later also buy the CL-series fire-fighting airplanes. Separately, Bombardier sold the CRJ program to Mitsubishi and, in a series of transactions, the C Series to Airbus. Longview renamed the Q400 the Dash 8-400, its original name, and resurrected the De Havilland name.
Bombardier also sold all its Downsview Airport facilities in Toronto, where the Q400 was assembled. The entire airport was sold to investors for real estate development, with the provision that BBD’s leased facilities would close in 2021.
So, production of the Q400 at Downsview was slated to close this year anyway. The pandemic accelerated production shut-down, which De Havilland (Longview) said it was merely “suspending.” Few believe production would resume, except, apparently, the union. Even if it does, it won’t be at Downsview. Where else in Toronto or Ontario Province might production resumes as the union demands is quixotic.
If De Havilland restarts production, it almost certainly will be in lower-cost Western Canada. Calgary would be the most likely location, we think.
But this is a big “if,” in LNA’s view. The Q400 has a large customer base, to be sure, but ATR’s gains can’t be overlooked or over-stated.
Turning “green”
Longview’s owner wants to pursue “green” aviation, but as LNA’s Bjorn Fehrm revealed in a long series, battery-powered aircraft don’t make technical, economic, or even environmental sense. Hydrogen-powered airplanes are well into the future. Retrofitting current airplanes with hydrogen power has limitations. Universal Hydrogen proposes loading hydrogen tanks into dedicated cabin space, with demonstration airplanes using the Q400 and ATR 72 forthcoming.
The big drawback to installing tanks in dedicated cabin space: the loss of revenue seats. Then there’s a shift in the center of gravity and wing-loading issues.
De Havilland’s union is sniffing kerosene when it demands Dash 8-400 production resume in Toronto or Ontario. To mix metaphors, that ship has sailed.
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