Today, LATAM Airlines Group announced the conversion of up to eight Boeing 767-300ER into freighters. The plan has two stages and will boost LATAM’s cargo capacity by 80%, the airline has said.
The first phase
Up to the third quarter of 2020, LATAM’s cargo revenue was US$855 million, an increase of 9.0% compared to the previous year. The airline will publish its full-year results by the end of March.
The cargo revenue increase was mainly driven by changes in the competitive environment due to the COVID-19 crisis, said LATAM. Between July and September 2020, LATAM transported over 46,000 tons of cargo on adapted passenger planes. Therefore, the carrier is looking to increase its cargo share permanently.
LATAM’s first phase of freighter conversion will take place between 2021 and 2022. During this time, the airline has already confirmed four aircraft to be received after conversion. LATAM will collaborate with Boeing on the process.
Upon completion of the first phase, LATAM’s cargo fleet will reach a total of 15 Boeing 767-300ER freighters.
The second phase
Between 2022 and 2023, LATAM and Boeing could arrange the conversion of an extra four B767-300, it said. If the options are executed, LATAM would increase its freighter fleet to 19.
Roberto Alvo, CEO of LATAM Airlines Group said,
“Growth plans have been accelerated with the conversion of up to eight Boeing 767-300ERs in the next 30 months. This investment, together with the significant cost efficiencies that we have generated during the Chapter 11 process, puts us closer to achieving our aspiration of being the best alternative for cargo customers.”
By 2023, the airline plans to strengthen its customer value proposition by combining passenger belly operations and its extended freighter fleet.
These conversions will enable LATAM cargo to grow in critical segments, said Andrés Bianchi, LATAM Cargo’s CEO. For instance, the Colombian flower market or the imports to Brazil are two niche opportunities.
Andrés Bianchi added,
“It also allows our affiliates to expand their network in domestic markets where e-commerce is rapidly generating an increase in air cargo traffic. Growing with Boeing 767-300BCFs is extremely efficient as it is the optimal aircraft for all these undertakings, and we can take advantage of the benefit of operating a single fleet type.”
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Cargo is the new popular trend
The COVID-19 pandemic crippled airline passenger demand due to severe lockdowns and travel restrictions across the world. On the other hand, air cargo performed better, despite the decrease in capacity due to passenger airlines grounding their fleets.
Alexandre de Juniac, director general of the International Air Transport Association (IATA), said last year that air cargo is surviving the crisis in better shape than the businesses’ passenger side.
For many airlines, the air cargo business became a vital source of revenues in 2020, despite weakened demand.
“But with much of the passenger fleet grounded, meeting demand without belly capacity continues to be an enormous challenge,” de Juniac added.
IATA predicts that 2021 will be a challenging year for cargo, due to travel restrictions in the face of new coronavirus variants.
Latin America is the worst region for cargo carriers, according to IATA. By December 2020, Latin American carriers reported a decline in demand of 21.3% in 2020 compared to 2019. The capacity fell by 35%.
In December, international cargo volumes in the region fell by 19%, said the association. The air cargo recovery in the area is not possible due to adverse economic conditions in markets such as Mexico, Argentina, and Peru. LATAM Cargo expects to change this trend.
Do you think LATAM will convert the eight B767 into freighters? Let us know in the comments.