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Qatar Airways to dispose of A330F fleet, intensifies price competition

There could be a second airline about to end its A330F operations in the Middle East. After Etihad parked its five A330Fs, Qatar Airways plans to return three A330Fs to their lessor upon the lease expiring in 2019. Qatar is considering selling the five A330Fs it owns. Qatar Airways is the second largest operator of A330Fs. Turkish Airlines operates nine.

The aircraft disposals could mean that one third of the A330F fleet is on the market from a few lessors and airline owners, creating price competition and perhaps the need for some creativity as owners with only one or two A330Fs partner with others for bigger deals to customers. There is opportunity for airlines that could not take a brand-new A330F to take one of these still relatively young A330Fs.

The larger freight operators are more interested in the 777F's longer range and higher payload capacity. Qatar Airways has an LoI for a further five 777Fs, which will make Qatar the second largest 777F operator after FedEx.

Summary

  • Qatar Airways is the second largest A330F operator.
  • Qatar to return three A330Fs to lessor BOC and seek sales on the five A330Fs it owns.
  • Qatar to replace A330Fs with 777Fs; has an LoI for five further 777Fs.
  • Qatar is second operator in region to plan A330F phase-out; five Etihad A330Fs remain parked.
  • One third of the A330F fleet could be on the market for sale and re-lease.

Qatar Airways to return A330Fs to lessor and seek sales

Qatar Airways’ chief officer cargo Guillaume Halleux gave Cargo Facts an update on the airline's A330F fleet. Mr Halleux said Qatar would return three of its A330Fs to the lessor upon lease expiry in 2019. Qatar has a further five A330Fs that it owns but will try to dispose of. Mr Halleux said: “I cannot hide the fact that we are considering removing them”.

Mr Halleux said the 777F provided stronger operating economics and was relevant as Qatar further spreads its network and becomes familiar with markets. Mr Halleux said the A330F was useful to put medium gauge capacity into a new market or test new frequencies (similarly to the way Qatar operated its passenger A330s), but once a market got past the start-up phase, a 777F was usually justified. With Qatar's destination roster growing, there are few markets remaining for Qatar to test out. Qatar will take delivery of two 777Fs later in 2018.

Like Etihad, Qatar is expected to phase out its passenger A330 fleet (one Qatar A330 has been repainted in the livery of Air Italy, which Qatar Airways has invested in). The prospect of ending passenger A330/A340 operations dampens the prospect for the A330F, which would require its own pilot and resource pool. This adds to the operating conditions, with airlines typically finding the A330F does not have enough range or payload. While the A330F may be suited for regional freight markets, there are not many of them, and operators value the long range and haul of larger freighters.

This development makes it most unlikely that Qatar will exercise its eight remaining options for the A330F.

Qatar operates eight A330Fs: it owns five and leases three from BOC Aviation, according to CAPA's Fleet Database. The frames from BOC Aviation are the oldest, manufactured between Oct-2012 and Apr-2013, putting their age between five and six years old. Qatar's owned A330s were manufactured between Aug-2014 and Jan-2016, putting their age between 2.3-3.7 years.

As would be expected, the oldest frames – those on lease – have the highest cycles and flown hours. The three A330Fs that Qatar leases are the only A330Fs under management from BOC Aviation

Etihad's A330Fs are still parked

Earlier in 2018, Etihad confirmed that it had parked its entire fleet of five A330-200Fs. The airline said in a statement that "it is normal airline industry business practice to continuously review aircraft requirements and to make modifications to the fleet when and where necessary".

The aircraft are stored in the UAE and range from two to nine years old, according to CAPA's Fleet Database. All have Rolls-Royce power plants, as is typical of A330Fs (although Malaysia Airlines A330Fs use Pratt and Whitney engines).

CAPA Fleets partner Oriel values the aircraft from USD49-79 million. Of the five, Etihad leases four and owns one, its second youngest (almost four years old).

Etihad continues to operate its fleet of five 777Fs (with a further 777F on order) but CAPA Fleets data suggests that from late 2017 there was some easing of utilisation, despite most freight operators reporting a strong end to 2017.

One third of the A330F fleet will be on the market

The likely addition of Qatar's eight A330Fs being on the market, combined with Etihad's existing five parked A330Fs (as well as one parked A330F formerly with Malaysia Airlines), means that 37% of the A330F programme will be on the market.

This was a small programme, but the high proportion of available aircraft makes it challenging for existing owners to secure favourable sales/leases, since there is competition. As noted, the ex-Malaysia Airlines aircraft has engines from Pratt, whereas other A330Fs are powered by Rolls-Royce.

Conversely, the availability of airframes and competition creates a buyer's market and could open the A330F platform to airlines that can make the aircraft viable but perhaps were not in a position to acquire or lease the aircraft brand new.

A330-200F fleet profile: as of 21-May-2018

Airline IATA ICAO Country Aircraft In Service On Order On Option Inactive
Turkish Airlines TK THY Turkey Airbus A330 A330-200F 9 0 0 0
Qatar Airways QR QTR Qatar Airbus A330 A330-200F 8 0 8 0
Avianca Cargo QT TPA Colombia Airbus A330 A330-200F 5 1 0 0
Malaysia Airlines MH MAS Malaysia Airbus A330 A330-200F 3 0 0 0
Hong Kong Airlines HX CRK Hong Kong Airbus A330 A330-200F 3 0 0 0
Hong Kong Air Cargo     Hong Kong Airbus A330 A330-200F 2 0 0 0
Avianca Brazil O6 ONE Brazil Airbus A330 A330-200F 1 0 0 0
MNG Airlines Cargo MB MNB Turkey Airbus A330 A330-200F 1 3 0 0
(Ex-Malaysia Airlines)       Airbus A330 A330-200F 0 0 0 1
Etihad Airways EY ETD United Arab Emirates Airbus A330 A330-200F 0 0 0 5

Boeing has more unfilled orders for the 777F than Airbus has built A330Fs

Airbus' most recently delivered A330Fs were two in Feb-2017: one to Turkish and one to Etihad (now parked). Since Jan-2017, Boeing has logged 13 confirmed orders for the 777F, comprising four for Ethiopian, three for Turkish Airlines, two for ANA, one for FedEx and three for unidentified customers.

Further, in Apr-2018 Qatar signed a Letter of Intent for five 777Fs. This would bring Boeing's 777F orders to 18 since Jan-2017. If Qatar's LoI is included, Boeing has 43 outstanding orders for the 777F – more than the 38 A330Fs that have been produced. 

Adding to Qatar's existing 777F fleet of 13 in service, with three on confirmed adding, the new LoI would bring Qatar's 777F fleet to 21. As at May-2018, Qatar and Emirates are the second largest 777F operators, with 13 each. Emirates, however, has no 777Fs on order. The largest 777F operator is FedEx, with 34 in service and 12 on order.

The A330 and 777 are highly successful programmes, along with their popular passenger variants. But for cargo, the 777F has found more success.

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