Atlas Air Warns of a Decade‑Long Shortage in Widebody Freighter Capacity

Atlas Air Worldwide is expecting a shortage of widebody freighter capacity for the next ten years and beyond.

Speaking to Air Cargo News at the recent Air Cargo Europe event, chief executive Michael Steen explained that widebody freighter capacity additions would struggle to keep pace with demand growth, given the need to retire older aircraft and the lack of new aircraft able to enter the market.

Steen explained that there are currently around 630 widebody freighters in operation, but around 100 of those are older than 30 years and are therefore heading towards the typical retirement age.

“What is important to also remember is that the older the aircraft gets, the lower the utilisation is going to be because you need to maintain them more frequently,” Steen explained.

“So, the global freighter fleet is now ageing and we are seeing a situation here that we haven’t seen before, where aircraft are retiring faster than they are being replenished.”

Steen said that widebody freighter capacity is only expected to grow at 1% per year as production of the Boeing 777 freighter is due to end in 2027 and deliveries of the next generation of widebody freighters – the Boeing 777-8F and the Airbus A350F – are not due to start until 2028 and the second half of 2027 respectively, assuming there are no further delays to the production timeline.

“This means you have at least one calendar year with zero new freighters,” said Steen.

Meanwhile, he pointed out that none of the three 777 conversion programmes have yet received certification from aviation authorities, and much of the feedstock is tied up in passenger operations as production of next-generation passenger jets continues to be delayed.

According to IATA, the global backlog for new aircraft orders has reached a record 17,000 aircraft.

On the demand side of the equation, cargo volumes are expected to grow at around 3.5%-5.5% per year in the long term.

“When you look at all this and put it together, we are going to be capacity-constrained well towards the 2040s, and there is structurally no way around it from a capacity perspective,” said Steen.

“The only thing that could derail this is a complete collapse of the global economy.”

On the topic of future widebody freighter capacity, Steen was circumspect regarding Atlas’ future plans.

The company is the world’s largest widebody freighter operator, with 15% of the global widebody fleet, when MD-11Fs aren’t included, but it has yet to confirm its plans for the next generation of freighters.

“We added eight widebody aircraft last year, we added two more 777 freighters this year, so the fleet is continuing to grow, and we will continue to capitalise on what is available in the marketplace over the next few years,” said Steen.

“But we are reviewing our long-term fleet strategy, and we will make a decision, likely this year, in terms of what we are going to do going forward.”

He pointed out that its fleet of widebody freighters was relatively young, which gives the company some flexibility.

On the current market conditions, Steen said Atlas takes a long-term view and considers the market holistically.

Atlas has capitalised on growing e-commerce demand with direct agreements with several of the e-commerce platforms.

However, this sector faces increased scrutiny, not only with duties now being applied in the US and other regulators looking to take similar steps, but also because shipments to the US now need to pass through the customs process, which increases both complexity and lead times.

Steen says there was a big demand dip when “liberation day” happened, with industry-wide volumes on the transpacific dropping by as much as 40%.

“But globally, airfreight continued to grow and demand continued to grow. The e-commerce players in China opened up new markets and re-routed their controlled capacity,” said Steen.

As a result, Steen said the impact of US tariffs and the removal of de minimis for China and Hong Kong had been “relatively muted”, although he added that the company did feel some of the impact.

Steen explained that Atlas is able to flex its assets and has a global reach, with more than 300 destinations in more than 80 countries, meaning it can more easily switch capacity to match demand.

He pointed out that combination carriers need to operate through hub and spoke systems, belly capacity is tied into passenger networks and integrators also need to operate through hubs.

“Our model is completely flexible because we literally just move the aircraft. We have outsourced all the handling, we have outsourced all the maintenance, so we don’t have that fixed infrastructure that holds you back.”

Also, much of Atlas’ business is on a long-term basis, which has also protected the company. Meanwhile, it also has a range of customer types.

“If you look at our business, we are highly diversified across the entire supply chain,” said Steen.

“We serve several airlines with ACMI capacity, we have dedicated agreements with several of the freight forwarders, we have dedicated agreements with the ocean shipping companies, we operate for all the express carriers, and we lease aircraft directly to manufacturers and e-commerce platforms as well.”

By: Aircargo News, Damian Brett