REPOSTED FROM AVIATION WEEK NETWORK. READ THE ORIGINAL ARTICLE HERE: https://aviationweek.com/air-transport/airlines-lessors/atsg-details-plans-convert-30-a330s-2028

U.S. cargo operator, lessor and freighter conversions specialist Air Transport Services Group (ATSG) has a busy aircraft-conversion pipeline for 2023, but the company also sees lower U.S. demand triggered by the economic climate.

ATSG’s Cargo Aircraft Management (CAM) subsidiary is expecting to convert and deliver 14 Boeing 767-300s and at least six Airbus A321-200s in 2023, with the latter destined for lease to European and Asian airlines. A further 16 767-300s are slated for conversion in 2024, most of which will be delivered to non-U.S. customers, along with a further six Airbus A321-200 conversions.

However, ATSG added that the timeline for the A321-200F deliveries rests on securing EASA approval for its joint venture’s A321-200 conversion design before mid-2023.

Work on 30 A330-300 passenger-to-freighter conversions is set to begin this year and will run into 2028. ATSG said more than two-thirds of these aircraft have already been placed.

At ATSG’s aircraft-leasing business, 12 767-200Fs are currently leased to Amazon and operated by ATSG’s cargo airlines. Just four of these 12 leases will continue into 2024; the other eight are scheduled to expire between May and September 2023.

“At least three” of these eight 767-200Fs Amazon aircraft coming off lease will be retired because of airframe cycle limitations. The engines from these aircraft will be removed and made available to other 767-200 leasing customers. The remaining five aircraft will be released or sold, because Amazon may not extend the contract.

ATSG said both DHL and Amazon are planning to cut their U.S. schedules—and 767 block hours—in the first half of 2023, compared with 2022.

“Both companies are adjusting their ground and air distribution and fulfillment networks in the United States to conform to reduced U.S. economic growth and consumer spending levels in the first half of 2023,” ATSG said. “ATSG’s passenger aircraft operations are likely to face similar effects.”

Despite these headwinds, ATSG expects “moderate” adjusted EBITDA growth in 2023, because demand for the newly converted freighters remains strong.

“The entry into new Airbus platforms along with the significant increase in leasing deliveries will increase our capital expenditures above 2022 levels,” ATSG president and CEO Rich Corrado said. “But clearly, 2023 will be a transition year for us, due to both a changing mix of leased freighters in service, and changes in flight schedules from customers of our U.S. airlines.”

ATSG is the world’s largest owner and operator of converted 767 freighters, specializing in the e-commerce and express markets. The group has three in-house airlines—Air Transport International, ABX Air and Omni Air International—and performs its own cargo conversions through Pemco Conversions. ATSG’s 2022 results and detailed 2023 outlook will be announced in late February.

References:

https://aviationweek.com/air-transport/airlines-lessors/atsg-details-plans-convert-30-a330s-2028