Air Canada Cargo has taken the next step in the expansion of its cargo business with an order for two 777-200 freighters to join the fleet in 2024.
The decision to go for factory-built freighters rather than convert passenger 777s was largely driven by the opportunity to get slots on the Boeing production line and have the aircraft available for service sooner, said Jason Berry, VP cargo.
At the same time, the investment reflects the outlook of the airline’s top management on the opportunities in the cargo business, he said. For a long time freighters had been anathema to the AC boardroom.
“The 777s are complementary to the business that we already have. there are a lot of opportunities,” said Mr Berry. “The investment in long-range widebody freighters, combined with our growing 767 freighter fleet, will allow us continue to bring to life the most flexible and diverse cargo operation in the Americas.”
AC is in the middle of a rapid build-up of its maindeck capacity. It has two B767-300 freighters in operation and will take delivery of two more before the end of the year. These, along with three more, including two factory-built 767-300Fs, will bring the fleet to seven all-cargo aircraft by the end of next year.
However, no firm decisions have been made about the deployment of the planes coming into the fleet, Mr Berry said. He stressed that the expansion of the all-cargo fleet was one aspect of AC’s build-up in the cargo business that had to be accompanied by the development of ground operations that were just as robust as the capabilities in the air.
“Our careful and targeted investments in our freighter fleet, and our self-handled cargo-only ground operations in our major hubs throughout Canada and internationally, together with staying laser-focused on our quality of service to the vast forwarding community we serve, are key strategies as we continue to strengthen and grow as North America’s only combination carrier,” he said.
AC Cargo has hired staff and is conducting reviews of its infrastructure and technology. One target for an overhaul is the carrier’s cargo facility at London Heathrow, where it has been operating for more than 50 years. The planned work there will result in a better experience for both employees and customers, claimed Mr Berry.
The order for two 777 freighters was announced at AC’s presentation of its results for the second quarter. The period saw operating revenue climb nearly five-fold from Q2 21 to C$3.981bn (US$3.1bn). AC’s net loss shrank from C$1.165bn a year earlier to C$386m.
Cargo revenue for the quarter was C$299m, down about 15%, year on year. The main factor behind the decline was the reduction in transpacific capacity driven by the lockdowns in China. Moreover, AC ended the use of ‘cabin freighters’ in May. It had fielded altogether 11 aircraft in that function, but those have all returned to passenger service.
Mr Berry said: “We are extremely pleased with our results. We had a decline in revenue, but we are growing our business.” Results are up in terms of volume as well as traffic with all major customers, he added.
Many macro indicators are pointing to a less-frothy market and lower rates ahead, but this did not give AC management second thoughts about ordering 777 freighters, he said.
“We are not highly leveraged on one area. Our flights are full. We feel good about our core lanes,” he said, adding he believed rates were bound to retreat from their stratospheric levels.
Credit The Loadstar by By Ian Putzger