MAS writes down value of A330Fs, blames P2F programme

Malaysia Airlines (MAS) has been forced to write down the value of its Airbus A330-200 freighters, blaming the airframer's recent decision to launch a passenger-to-freighter conversion programme for the type. The carrier's MASkargo division will take delivery of the last of four new-build freighters this year, dating from a 2010 order. It also operates a pair of Boeing 747-400 Freighters.

However, in its full-year results for 2011, MAS booked an impairment charge of M$314 million ($104.8 million) against the value of the aircraft, citing losses in the cargo operation and the conversion programme which it said will "depress the value of new freighters". Revenue at MASkargo fell by 14% in 2011, leading to a pre-tax loss of M$19 million, compared with a M$141 million profit in 2010.

MAS also plans to significantly reduce the size of its fleet by 2014, taking it from the current figure of 91 aircraft down to 80. This will involve the return of some 58 older airframes to lessors, with the majority of these leaving MAS's fleet in 2012, it said.

Fleet reductions will focus on the "older uneconomical 18- to 19-year-old aircraft", it said. According to Flightglobal's Ascend Online database, the bulk of these are 737-400s, with it operating 33 of the narrowbodies built prior to 1995. Just three of its 36 737-400s were manufactured after this date. Depending on when the older types are phased out, it could leave the carrier with as few as 33 of its current fleet this year.

Total cost of the retirements will be M$1.03 billion, with a charge of M$602 million booked in 2011's accounts. A further write-down on the value of aircraft spares cost it an additional M$179 million.
Meanwhile in 2012 MAS will receive 23 new aircraft, it said. According to Ascend this includes two A330Fs, eight 737-800s, three ATR 72-500s, four A330-300s and five A380s, with one as-yet unknown, from a total backlog of 60 at the start of 2012.

By 2014 the average age of its fleet will have been cut to 7.7 years, it said.

Flight Global

Soaring demand drives Airbus to plug freighter gap

Airbus's decision last week to launch a passenger-to-freighter conversion programme for its A330 twinjet was long overdue. The airframer's own global market forecast for freighters, issued last year, predicts demand for a total of 2,731 cargo aircraft over the next 20 years, split between 834 new-builds and 1,897 conversions.

Yet until last week's announcement, Airbus had addressed that demand solely with its new-build A330-200F. Although that programme has arguably under-performed, accumulating just 69 orders to-date, Airbus believes that section of the market still holds considerable sales potential.

Again, the global market forecast offers a clue to the airframer's thinking. It predicts that most of the growth in that 20-year period will come in the mid-size freighter market occupied by the A330. That equates to a total of 1,327 units, with potential for around 900 conversions according to the forecast.
Demand will be driven both by growth in the cargo market and the need to replace older aircraft. In fact, Airbus says around 570 aircraft will need to be replaced in the mid-size sector alone.

Likely candidates for replacement by the A330 P2F are the Boeing MD-10F/McDonnell Douglas DC-10, and at the lighter end, the Airbus A300 and A310 freighters, all of which still have a significant global presence. Flightglobal's Ascend Online database lists 81 MD-10Fs in active service, 198 A300 freighters and 54 A310 freighters. The vast majority of the three types are operated by US express carrier FedEx.

Closer analysis of its fleet using Ascend shows the Memphis company operating a total of 73 MD-10Fs - both -10Fs and -30Fs - with an average age of over 33 years. There are also substantial numbers of A300Fs (71) and A310Fs (45) in its fleet, with an average age of 19.5 and 25.5 years, respectively.
Boeing lists the MD-10-30F as able to carry a payload of 79.4t (175,000lb) over 3,305nm (6,115km). Although no payload-range figures are yet available for the P2F programme, Airbus gives the line-build -200F's maximum payload as 70t over 3,200nm.

 Clearly the P2F will not be a like-for-like replacement for the MD-10, but Airbus suggests the type's fuel efficiency more than compensates for what it loses in payload and range. Assuming a fuel cost of $100 and above per barrel, the -200F model need only have utilization of 2,200h per year to compensate for its $211.5 million acquisition cost against the Boeing, claims Airbus.

The necessary utilization would slide even further in Airbus's favor with a P2F aircraft. Airbus has not disclosed a list price for the conversion, however early estimates put a total cost at around $30 million. Early -300 models, produced between 1994 and 1997, are valued at $22.5-$25 million, according to Ascend. Newer aircraft are worth anywhere between $41.7 million and $58.95 million for the higher-gross weight -300 and $38.5-$51 million for the -200.

Ascend analyst Chris Seymour puts the optimum age for freighter conversion at 15 to 20 years. Early A330 models sit comfortably in that age range, but Seymour says the success of the programme rests partly on the availability of "feedstock" aircraft ripe for conversion. Numbers are plentiful: Ascend lists a total operational A330 fleet of 800 aircraft, split almost equally between the -200 and -300. And with the first P2F conversion not due to roll out until 2016, Seymour predicts even greater feedstock availability as airlines de-fleet in favor of new models.

Lessor Guggenheim Aviation Partners is active in the cargo sector, for instance leasing three 777Fs to European operator TNT Airways. Steve Rimmer, chief executive officer, says it is "intrigued by the programme" but stresses it is too early to form a firm opinion.
He says: "Feedstock for conversions and the increasing focus on age limitations will need some consideration. Payload range will be key.

"The production freighter has been slow in gaining momentum and that makes us a little cautious. However, it's definitely on our radar and we will be spending some time reviewing it when there are fuller details available."

One airline viewed as a potential launch customer for the conversion is Qatar Airways. The Doha-based airline has 29 A330-200 and -300s in service and, with the latter about to start being replaced by Boeing 787s, it has been urging Airbus to launch an A330 cargo conversion programme. Airline chief executive Akbar Al Baker has previously said that the converted A330s would be operated either by Qatar Airways' expanding cargo division or placed with its leasing division for placement with other freight operators.

One reason for Airbus's previous reluctance to launch the P2F programme was the fear of cannibalising sales prospects for the -200F. However, Seymour argues the two products are "complementary", citing their different mission profiles and the commonality between the types.

It is also worth noting that the existence of a P2F conversion programme has not particularly hampered sales prospects for Boeing's 767-300 Freighter. Some 35 of the converted 767s are in service and Boeing has taken a total of 111 orders for the 767-300F, with 46 still to be delivered, including to FedEx and fellow US parcel carrier UPS.

Flight Global

Airbus to decide on A330 enhancement in second half of 2012

A350 Concept

Airbus intends to decide whether to proceed with enhancements to the A330 during the second half of this year, but is still reticent to provide many details. The airframer is studying the possibility of raising the maximum take-off weight of the A330-300 by 5t, taking it to 240t and potentially prolonging the life of the type as it develops the A350 XWB. However, its strategy for achieving the additional capability remains unclear, beyond indications last month that "sharklet" wing-tips could be adapted to the larger twinjet.

Discontinuation of the A340 potentially offers a mechanism to reduce weight, as there would be no need to maintain structural commonalities between the two types. While the A330 would have been structurally different as a "clean sheet" aircraft, Airbus would need to assess whether there is room to make any economical alterations on its production line.

Proposals for a higher-weight A330 revive a plan to create a longer-range version of the -300, discussed by the airframer more than a decade ago. That plan also aimed for a 240t take-off weight, as well as higher-thrust engines. But the A330-300's take-off weight remained at 233t until last year, when the airframer offered a 2t hike to 235t. Airbus would want to avoid any major change on the undercarriage. While it had previously considered adopting the A340's distinctive centre gear to reduce pavement loading, such a decision would simply add weight - and complexity.

All three major engine manufacturers offer A330-300 power-plants. There is no immediate evidence that Airbus is considering re-engining the A330, a move which would essentially bring the airframer back to the original A350 - a concept which received a tepid response from the market when first promoted as a Boeing 787 rival. Airbus is giving little away, although it has indicated further details could be released during the Farnborough air show.

"As part of Airbus's philosophy, we are continuously looking at the market and studying further improvements to our portfolio," said the airframer. "Any decision on whether to proceed will happen in the second half of 2012."

 Source: Flight Global

A new operational life for “mature” A330s as converted freighters

Increasing Useful Life of older A330

Airbus will expand its freighter family portfolio with the A330P2F conversion, modifying A330s that have completed their useful operational service as passenger jetliners for new careers as cargo aircraft.

This conversion program, unveiled during the Singapore Airshow, brings together the resources of Airbus, its EADS EFW sister company within the EADS group, and ST Aerospace of Singapore.

Both A330-200 and A330-300 versions of Airbus’ twin-engine jetliner will be eligible for the P2F (passenger-to-freighter) conversion, meeting the expected demand for modern, efficient and highly capable mid-sized cargo aircraft.  They are to complement Airbus’ A330-200F freighters, which are new-production jetliners that also respond to the requirements of this cargo market segment.

“Both the A330-200F and A330P2F will play a key role in this market segment, as the A330 has established itself as the most popular platform in the mid-sized wide-body category,” explained Andreas Hermann, Vice President - Freighters at Airbus.  “The A330P2F addresses a different price-point and end-users, based on different operational requirements.”

He said the market already has proven it can support both new-production freighters and converted freighter products using the same aircraft platform as the basis – if the platform is right.  “We believe the A330 is one such platform, and we expect it will enjoy strong demand in both products.”

The A330 first entered service in 1994.  Nearly 1,200 aircraft have been ordered, with almost 850 delivered to date.

Airbus Media