Boeing's Aging 767 Enters Its Golden Years
"Passenger 767s are becoming available, being replaced by 787s or A330s, with aircraft pricing conducive to looking at freight conversion," said Steve Rimmer, CEO of Guggenheim Aviation Partners LLC, a Seattle-based aircraft leasing firm. "They are a good fit for the medium-haul freight market."
Boeing said Wednesday it will convert three Guggenheim-owned 767-300ER jets to freighters. The work will take place at ST Aviation Services in Paya Lebar, Singapore. Guggenheim previously owned one of the planes and purchased two others. Rimmer said the price was "somewhat less" than the price of a similar aircraft from the mid-1990s, which is around $15 million.
The agreement is a landmark in the evolution of 767 usage, said Boeing spokesman Bob Sailing. During the 2010s, Boeing completed seven 767 conversions for Japanese carrier ANA, but in those cases ANA was paying to have its own aircraft converted. "Once we completed the work for them, we had the 'feedstock' issue," Sailing said. "The residual value of the airplanes meant it was not worthwhile to convert" for parties who did not already have their own airplanes.
At that time, the 767 had a relatively high value as a passenger aircraft. Add to that the cost of conversion, around $15 million per aircraft, and it was clear the 767's time had not arrived. But now, 767s are being replaced by larger, more efficient passenger airplanes including the A330, A350 and A380 as well as the 787, which this week began flying intra-U.S. routes for United (UAL) .
The airplanes were all slow to arrive, but with the exception of the A350 they are now in service. Additionally, new cargo versions of the 747-8 and the 777 freighter have also become available in the past three years. The large number of new aircraft contributes to a diminution in the value of older 767s. Conversion "is a solution to the problem of what to do with airplanes that otherwise have no market," said aviation consultant Scott Hamilton.
The 767 entered service in 1982 and made history because "up to that point, with the exception of a few charter carriers, all airlines used three- and four-engine airplanes" for trans-ocean flights, Hamilton said. Subsequently, aircraft makers developed additional twin-engine aircraft including the 777 and A330. The 767 remains the preferred trans-Atlantic airplane, flying the route more frequently than any other aircraft, Boeing maintained. But orders for the passenger version have dried up.
On the cargo side, Boeing still produces new 767 freighters. That is because congressional approval of the Air Force aerial refueling tanker program early in 2011 meant 179 more aircraft for the 767 line, making it important for Boeing to keep the line open even before production ramps up. Late in 2011, FedEx (FDX) saw leverage in Boeing's situation: It ordered, presumably at a low cost, 27 new 767s for use in domestic cargo transport.