Exclusive - LATAM Cargo Places Order for P2F Conversion of Boeing 767-300ERs

LATAM Cargo and Boeing have inked a contract to convert three of the Latin American carrier’s Boeing 767-300ER (extended range) passenger aircraft into freighters. The first of the three conversions will be handed over to LATAM Cargo next November, while the other two jetliners are scheduled to follow in 2019 and 2020 respectively.

Andrés Bianchi heads LATAM Cargo since April 2017  -  company courtesy
Andrés Bianchi heads LATAM Cargo since April 2017 - company courtesy

The step follows LATAM Cargo’s decision for a rollover of their freighter fleet, getting rid of their formerly deployed four Boeing777Fs and operating a uniform fleet of Boeing’s smaller variant B767F. This is scheduled to be accomplished by 2020 when the Santiago, Chile-headquartered capacity provider expects to be operating 12 B767Fs. Together with their current fleet of eight B767Fs, a further unit is expected to arrive in Santiago this coming May, the conversions will be deployed within South America and on routes to Europe and the USA. Their main task is to complement freight transported in the lower decks of the carrier’s passenger fleet.

Workhorse Boeing 767F
In an exclusive interview with CargoForwarder Global, LATAM Cargo CEO Andrés Bianchi said that B767Fs are tailored to the extremely volatile South American market with its many seasonal products, fitting his company’s needs much better than the larger sister model B777F. “The B767F, able to carry up to 62 tons of dimensional weight, gives us more operational flexibility compared with the larger B777F that uplifts roughly 100 tons per flight.” As internal studies have shown, the B767Fs ensures balanced loads, thus minimizing the freight carrier’s commercial risks.

Expectations were too optimistic
Concentrating on B767Fs is a U-turn in LATAM Cargo’s fleet philosophy mainly triggered by external developments. A decade ago, market experts and financial analysts predicted the BRIC countries (Brazil, Russia, India, China) to enter a phase of exceptional economic growth, giving the LATAM managers an optimistic view of the future, prompting them to add four Boeing 777Fs to the fleet. However, as seen by the Brazilian example, these forecasts were way too exaggerated, making the Triple Seven adventure very expensive. Reasons Andrés Bianchi in retrospect: “We’ve seen two shifts during the last decade: Brazil, not only didn´t grow but went into a recession and remained volatile economic. Simultaneously, cargo transportation experienced a significant switch from main deck to belly hold capacity.”
He concludes that thanks to the upcoming alignment of the freighter fleet “we can much better cope with the challenges posed by market volatility and maintain our regional leadership in the Latin American region.”

Latam Cargo Boeing 767F at Santiago Airport  -  picture: hs
Latam Cargo Boeing 767F at Santiago Airport - picture: hs

Costs were not disclosed
LATAM Cargo’s three aircraft will receive major modifications on their main decks - including new cargo doors and surrounding structure, new floor grids, floor panels and seat tracks to accommodate the cargo handling systems. The agreement marks the first contract for 767-300 Boeing Converted Freighters (BCF) with the carrier and in the Latin America region.
David Longridge, VP Commercial Services Sales for Boeing Global Services commented: “We look forward to supporting LATAM Cargo with our Boeing Converted Freighters as they expand freighter operations and introduce the 767-300BCF to the region.”
Neither LATAM nor Boeing mention the expenditures for the conversions. Experts estimate costs amounting to something between 20 and 22 million US dollars per unit.

Atlas Air purchased LATAM Cargo’s remaining two B777Fs
LATAM has sold their last two Boeing 777 freighters to Atlas Air Worldwide Holdings. Both aircraft will operate in ACMI service for DHL Express through Atlas’ subsidiary Southern Air. While the first freighter will start to operate in March already, the second aircraft is scheduled to begin service at the end of Q2, announces Atlas Air.
Atlas Air Worldwide President and Chief Executive Officer William J. Flynn commented: "These 777 freighters enhance our position in this attractive aircraft type and are consistent with our strategy of growing the operations that we acquired as part of Southern Air."
The price Atlas paid for both aircraft was not revealed. All the company says is that the expected financial and operating impacts of the two 777 freighters in 2018 were incorporated in the company's earnings growth framework announced on February 22, 2018. The Atlas statement further reads: “The company anticipates that its full-year 2018 adjusted net income will grow by a mid-twenty-percent level compared with 2017.”

Heiner Siegmund

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