British Air’s exit from dedicated cargo fuels doubt over 747-8F future

The decision by British Airways to exit the dedicated freighter business by returning three Boeing 747-8Fs to ACMI operator Atlas Air demonstrates the continued weakness of the global air freight market.

Boeing is counting on the global freight market to improve this year, and with it, sales of the 747-8F. We’re not so sanguine.

Even if the global freight market improves, we are skeptical that Boeing will see much in the way of orders to boost this faltering program. There remain a large number of 747-400Fs in the desert that can be recalled to service at a cost a lot less than a new-build 747-8F will cost. Likewise, there are still a fair number of 747-400 passenger aircraft in service and in storage ready for conversion.

We recognize that the 747-8F is more fuel efficient and maintenance is less than the 744s, but the much higher capital cost demands high utilization and risks greater financial impacts if the airplane has to be parked during a downturn.

Boeing’s 777F is smaller, less costly and uses less fuel than the 747-8F. While it also carries less, it can be argued that the 777F is “right-sizing” aircraft for the changing market conditions. But Boeing is struggling even with this model. The company sold just one nine 777Fs since late 2011.

Boeing plans a 777-8F, but this will not enter service until well after the 747-8 program is likely terminated.

Airbus hasn’t had much success for its new-build A330-200F. Some customers proved to be unable to take delivery, while another—Intrepid Aviation—changed its entire order of 20 for the passenger version and up-gauging these to the A330-300 in almost all cases. The cost-benefit analysis by some concluded the price of the new-build A330F was too high for the benefit gained through economic efficiencies and payload. Airbus announced a small sale at the Dubai Air Show, but otherwise has seen a steady decline in the backlog over and above deliveries.

Aside from the continued economic weakness and a surplus of available used equipment, the belly cargo-carrying capability of the Boeing 777-300ER and the Airbus A330 enables shippers to take advantage of these aircraft for many flights. Interestingly, when Boeing prepared to ship all the equipment and repair components around the global for its 787 battery repairs, it used belly-freight capacity, not dedicated main-deck freighters.

The proliferation of 777s, A330s and the forthcoming A350 and the 777X may well further spell the demise of the 747-8F as nothing more than a niche aircraft based largely on sales already completed. We certainly expect to see a few more sales, but nothing consequential.

31 Comments on “British Air’s exit from dedicated cargo fuels doubt over 747-8F future

  1. The A380F will probably not be build in the foreseeable future. Still the A380 gave the 747-8F a thick of the tail. Many A380s replaced well maintained 744s at the flag carriers that are now waiting in deserts for cheap conversion. Purchase, converison and D-check combined still amounts to 20-30% of a new 747-8F price. And that is a lot of fuel.. and upfront investment / risk reduction.

  2. The unique capabilities of the B-747-8F to carry over sized cargo economically should assure it stays in production for years. Yes, the An-124 has even more over sized cargo capability, but at a much higher operating costs.

    • Nothing usefully uniq in the 747-8F.
      Front loading is available on any old 747 dedicated freighter.
      But then available height is limited for both on that loading path.

  3. AorB-streamed paxliners-F are referred to as ‘dedicated’ airfreighters yet factually are but compromised ULD-liners, whereas Logisticians want a proper AGA-liner (call it ‘TEU-liner’), Current belly-freight FTK onboard WB paxliners are costed marginally, to approx. 0.20 €/FTK (eg A333 with TCS), whereas main-deck airfreight production costs come at minimum 0.31 €/FTK .. whence the marginalisation of the ‘dedicated’ airfreighter. To recover the lost ground, somebody needs to come up with a super-efficient TEU-liner, competitive with belly-freight ! Such a tool would trigger massive modal change from Triple E to TEU–liners, opening a variety of new markets to replace the dying 744F, A332F, 747-8F …

  4. Afraid that dedicated freighters have been a less than perfect plan.
    The 747 in all freighter forms has a nose loading limit that requires the use of the side door for high items, and then the length of the freight becomes an issue, (Been there done that.)
    The only true air freighter is the AN124/225 and they have not been stellar performers in term of sales.
    Cannot see the future of this market outside the historic modified old airliners.
    New build freighters have been an interesting exercise, but unlikely to have made any money for the OEM’s.

    • Not true, Andrew. Boeing has sold hundreds of dedicated new build freighters in the last 10 years alone. Airbus sold over 100 A-300-600Fs in the mid to late 1990s and early 2000s. Boeing sold some 175 B-747-400F/ERFs in the same period.

  5. Scott,

    According to Boeing’s O&D website… They have sold 38 777F’s since Sep 2011.

    • We said “late” 2011, not September:

      “The company sold just one 777F since late 2011.”

      The correct number is nine, not one, not 38.

  6. If you cannot transport something, you need workarounds. Usually no big deal. Assemble on site. The size of an LD3 container is known, and most logistic chains will try to limit their required volume to exactly this size. Thus, they can chose between multiple providers and have best price. Designing an aircraft for outsized cargo? Rubbish idea. By the way: new Beluga will be available at some point, and despite its payload-range shortcomings it will be the king of outsized cargo. Does Boeing rent out its B747LCF?

    • “Does Boeing rent out its B747LCF?”

      They can’t. It is restricted to transporting 787 parts.
      And like the “swing fuselage element access” Guppy range of conversions
      of rather limited utility. Optimising turnaround times was a major target
      for the A300 based Airbus Super Transport.
      AN225, AN124 and Airbus Beluga cover the range of outsize cargo demand
      quite well.

      • Airbus doesn’t rent out their Bulugas very often. There are only 5-6 of them, There are only 4 B-747-400LCFs, one An-225, and just a handful of An-124s.

          • None of the NATO leased An-124s are not leased “on demand” or charters, meaning to get these airplanes, NATO must wait up to 10 days. They are not chartered aircraft. The An-124s are also an interim lease pending delivery of the A-400M from EADS/Airbus. The 3 SAC C-17s get more use than the 6 An-124s, as well as C-17s of the RAF, RCAF, and USAF. However most cargo moved to and from the EU and Afghanistan is moved by B-747Fs.

        • KC, did you read the link:
          “The SALIS contract provides two Antonov An-124-100 aircraft on part-time charter, two more on six days’ notice and another two on nine days’ notice. The countries have committed to using the aircraft for a minimum of 2000 flying hours per year for 2013 and for a minimum of 2450 flying hours for 2014. Additional aircraft types i.e. IL-76 and AN-225 are included in the contract but it use is subject to availability.”

          According to the German Accountability Office An-124 flights are multiple times cheaper than moving cargo around with C-17s. According to one source the total costs are 15,000 € per hour of flight.

          The 3 Strategic Airlift Capability C-17s were bought. So it might be cheaper to use them.

        • How is the use accounting done for those “bought” C-17 ?
          ( And how is access regulated ? )

  7. IATA/ICAO statistics for airfreight = annual 200 billion FTK or 2 % of the annual statistics for world’s traded containerised merchandise …. the other 98 % or 10 trillion FTK are moved by shipping. 1 % modal change means a boost of 50 % to the world’s airfreight statistics. Enough to put 50 SuperFreighters into operation (26 TEU/350 m.tonnes payload over 6,200 nm = 2 billion FTK/year/unit); to replace existing fleets, you need another 50 units … shoot for total 5 % modal change in 25 years, and the total market is for 300 TEU-liners, times 2.8 times the list-price ($-2014) of A332F or 200 G$, a quite sizeable so far unsuspected market … first come first served ?

    • Sorry keesje, I just don’t see a civilian market for the A-400M. Boeing and MDD already tried that by offering a civilian model of the C-17, called the BC-17 and MD-17. There were no takers. The closest thing to a BC-17 is the Qatar Air Force C-17 painted in QR colors, but even that one is a military jet.

    • A400M Civilian? Will. Never. Happen. Or if it did, it wouldn’t sell in any significant numbers. I’m afraid that bird will be gov/mil use only.

      • C130, C160 and the smaller CASA types have ( few ) civil users.
        I expect the A400M to find interest for semi civil applications.
        ( But obviously nothing in large numbers )

    • Keesje,

      It appears that the cost, design and performance of the A400M have rendered it an utter failure, or, as the CEO of Airbus might say, “…a horror without end”. If Boeing could not sell the C-17 in the civilian market, the A400M doesn’t have a prayer….and it even gets worse.

      Although it can be said that the Airbus a380 is a failure, it will eventually succeed in breaking even in production costs (yes…even on a program level!) and the lessons Airbus learned from the experience can be applied to the a350 Program – especially lessons learned in building composite wings and panels, avionics and flight controls, and lessons learned in coordinating a large development project. Also, as a result of the a380 debacle, Airbus got a new and very-good management team. So…the a380 was a dissapointment, but from its ashes rises the a350 – which is set to become a absolute world beater if Airbus can produce it profitably – and it’s conservative design and outsourcing suggest that this is the case.

      On the other hand…from the failure of the a400M what has been learned that can be applied anywhere else? And in that way, the a400m is like the Lockheed L1011 – another high-tech aircraft that financially clubbed its maker (i.e., Lockheed) about the head and shoulders and from which nothing good ever evolved.

      • It appears that the cost, design and performance of the A400M have rendered it an utter failure, or, as the CEO of Airbus might say, “…a horror without end”. If Boeing could not sell the C-17 in the civilian market, the A400M doesn’t have a prayer….and it even gets worse.

        Could you bolster your case with a couple of references with hard facts coroborating your asessment?
        Thanks in advance!

        • Airbus could recycle A400M’s plastic wing with a reduced wingspan by about 10 meters. A400M’s fuselage is far to wide for 100 pax. CASA could do the wing and ATR the fuselage.

  8. Forwarders are eager to ship by airfreight products with densities ranging from d = 0.34 (minimum requisite) through d = 0.45 (bulk of the demand) to maximum d = 0.75 (exceptionally) … the useful internal volume of the TEU averaging 33 m3, this implies unit m.tonnages per TEU of 12 t through 16 t, up to 26 t (tare included) … the 747-8F or 744F are limited to MGW 11 t/TEU (tare included) … adapt the tooling to market demand, and market demand will explode !

    • Are you proposing loading regular 20’/40′ Boxes on a freight airplane?
      A bit of excess dead weigh to start with ( 20′ : 2.4t, 40′ 4.0t ).
      The profile is inefficient ( square peg in a round hole 😉

      • Only TEU, I’d leave FEU to the Triple E where they belong. Your dead weights are quoted from Shipping, For the AGA, you’d soon find them below 7 % tare/MGW : currently available @ 11.3/1.0/10.3 (8.8 % tare) AGA are improving fast, soon we’ll find them @ 12.9/0.9/12.0 or even better, @ 16.1/1.1/15.0. Building a TEU-compatible air-freighter is not akin ‘la quadrature du cercle’, if starting from a clean sheet with those boxes set on your mind, Uwe.

      • Maritime TEU/FEU are made strong to withstand being stacked FULL (MGW 24 m.tonnes) whereas ICAO AGA are being stacked only when empty … when full, they are … on the move, unstacked !

  9. Nobody ever designed an AGA-liner, the ‘par excellence’ response to what Logisticians crave. Few attempts have been made even at designing AirFreighters from scratch, those that were produced were designed with military rolling stock in the cross-hairs, with funding from Pentagon, NATO, Duma and similar institutions.

    The Mirya and the Ruslan are good examples : latching is performed manually, turn-around time is from 3.5 h to 6 h, the fuel consumption is scandalously high compared on ‘civil’ standards … both are unfit for mass-moving civil AGA.

    The nut to be cracked is to challenge the cost per FTK of WB belly-freight. To achieve such a goal, turn-around full-in/full-out must come below 2 hours, the Payload/MTOW ratio must come close to or exceed 0.40, plus we need resorting to scale effect, with classical apron PCN, plus the TO/L performance of the best WB ?

    To your drawing-boards, Gentlemen !

  10. Pingback: Boeing’s plan to bridge 777 production gap includes a 777-200 P2F strategy; we’re skeptical of the idea | Leeham News and Comment

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