Only a year ago it was still possible to speculate on the demise of the freighter aircraft market, one of the key strengths of Israel’s commercial aerospace industry.
In early 2015, the air cargo market seemed forever mired in a recession that began seven years earlier, broken only by a couple of short-lived recoveries. Moreover, steadily climbing production rates of passenger aircraft by Airbus and Boeing were flooding the market with belly freight capacity, turning Emirates Airlines, for example, into a major freight carrier.
But something happened by mid-2015 to reverse the course of the market and propel Bedek Aviation Group – the maintenance, repair and overhaul (MRO) and conversion arm of Israel Aerospace Industries – into a state of rapid expansion across all the major market segments for aircraft conversion.
After managing only a trickle of conversion projects in 2013 and 2014, Bedek now has five Boeing 767 conversion lines fully occupied and sold out for two to three years. The company has announced it will be launching or studying four new narrowbody conversion programmes, including what could become Bedek’s first use of Airbus feedstock, and one widebody programme. Moreover, Bedek is even predicting demand for the Boeing 747-400 converted freighter – once assumed dead forever – is back, potentially leading to new orders in the very near future.
Moshe Haimovich, director of marketing and business development of Bedek, notes the 747-400 converted freighter was only recently considered a “dead horse” by the industry.
“The 747-400 is not dead yet,” Haimovich says. “And we hope – we are certainly more confident – that we will surprise and might have some announcement in the near future for this dead horse, which is not dead at all.”
Nor is Bedek.
IAI started with the establishment in 1953 of Bedek, with 70 employees who worked amidst sand dunes around what was then Lod airport, later renamed Ben Gurion International. Bedek's founder, an American-born jew named Al Schwimmer, had a broad vision for a full-service aerospace company, but in the early years it was focused on overhauling aircraft operated mainly by the Israel air force and El Al.
Some 63 years later, Bedek is still going strong as a substantial part of the commercial activities that comprise nearly one-fourth of IAI’s revenue. It is also a key part of the company’s commercial growth strategy, as IAI seeks to tap a greater share of the thriving commercial aerospace business.
Expanding the company’s MRO business is a key part of the strategy. Bedeck is offering to partner with foreign companies, especially in Southeast Asia, to provide the company’s decades-long expertise in repair work. The joint venture announced on 12 January with Bedek and Hubei Province-based Lingyun Science and Technology Group, is an example of how the strategy is being executed. The joint venture opened with a focus on providing maintenance services for commercial aircraft and cargo conversions. But the agreement also lays “the groundwork for additional business”, IAI says.
“We are very aggressive these days looking for new product development, partnership, joint ventures and teaming,” Haimovich says.
The growth strategy is led by the newly-surging cargo conversions business. The company has performed more than 200 cargo conversions in the last 20 years across all three major market segments – narrowbody, medium widebody and very large aircraft. New products in development bracket the small and large ends of the market, but the majority of the company’s activity today is in the middle of the market.
Bedek has delivered 60 767-200ER converted freighters, virtually cornering the market over the last decade. But IAI’s attempt to introduce a 767-300ER freighter three years ago struggled to gain momentum. A market downturn at the time helped dampen demand for the new product. But Bedek also faced a problem with availability.
The natural replacement for the passenger-carrying 767-300ER is the Boeing 787-8, so that programme’s 3.5-year delay during the development phase, and mishaps during the production ramp-up, caused unexpected problems for Bedek.
Later, “Boeing succeeded to be up to speed with deliveries of 787, and suddenly we saw a lot of 767-300ERs available in the market,” Haimovich says. “And when there are aircraft available in the market, there are also people [for] who it is their business, either as lessors or airlines who acquire or purchase aircraft and convert them for their own use. Suddenly we faced a situation where we had a lot of enquiries.”
With the 767-300ER programme ramping up, Bedek could return to a long backlog of potential development projects. For years, Bedek has discussed the opportunity of launching a passenger-to-freighter conversion programme for used Boeing 737NGs. Potential rivals, such as Pemco, AEI and Boeing, have discussed similar programmes, with AEI formally launching a 737-800 conversion programme last year with lessor GECAS. Pemco and Boeing’s conversion programmes remain in the pre-launch phase. Boeing has secured an agreement with China Postal Airlines to order 10 converted 737-800s, pending a programme launch by Boeing.
Last May, Bedek formally launched a conversion programme for the 737-700 with a launch order from an undisclosed customer. The number of aircraft involved in the transaction was not announced, but Haimovich allows the order involves “more than two”. A supplemental type certification for the conversion is expected to be approved this year.
“Following the 737-700 we are under an evaluation stage of the 737-800,” Haimovich says. “For the 737-800, again we have discussions with potential launching customers. We completed a technical feasibility study and we didn’t launch formally yet the programme, but it’s most likely going to happen in the near future.”
For at least six years, Bedek has also considered launching a conversion programme for the Airbus A320 and A321. In 2010, Flightglobal reported Bedek was exploring a partnership with Airbus and a Russian company to launch a programme. That venture never materialised but Bedek continued to study the option. Meanwhile new competitors entered the frame, with California-based PacAvi teaming up with China’s Gameco to launch a programme to convert the A320 and A321. Later, EFW, ST Aerospace and Airbus announced a similar programme at last year’s Paris air show.
Meanwhile, Bedek is also reconsidering the Airbus narrowbody conversion market, Haimovich confirms.
“We have not acquired an aircraft,” he says. “But we are doing a feasibility study and market study to conclude if we want to enter into the A320/321 cargo conversion programme.”
The A321 is viewed as a potential Boeing 757 freighter replacement, with the capacity to hold 13.5 pallets versus 15. Although Haimovich views North America remaining as a Boeing-oriented freighter market, the Airbus aircraft have the potential for appealing to a growing customer base in the Far East.
Finally, the company is continuing to develop a conversion programme for the Boeing 777-300ER, an attempt to challenge the airframer’s dominance with a factory-built freighter version of the 777-200LR. Three years ago IAI acquired a 777 to learn more about the aircraft as Boeing declined to license Bedek to perform the conversion.
“We needed the fuselage and the wings to do the calculations for our study,” Haimovich says. “We even did the finite element models because at this stage we don’t have any license agreement with Boeing on the aircraft. We’re doing our conversion by reverse-engineering.”
Source: FlightGlobal.com
