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ST Engineering, Airbus JV to expand A321 freighter conversion program

FILE PHOTO: A logo of Airbus is seen at the entrance of its factory in Blagnac near Toulouse, France, July 2, 2020. REUTERS/Benoit Tessier/File Photo

SYDNEY (Reuters) - Singapore’s ST Engineering and its joint venture with Airbus said they would set up new sites in China, Germany and the United States by 2023 to convert A321 passenger planes to freighters after the first one entered service with Qantas on Tuesday.

Singapore Technologies Engineering Ltd STEG.SI and its Elbe Flugzeugwerke GmbH (EFW) JV with Airbus SE AIR.PA plan to expand beyond Singapore allowing it to convert around 25 planes each year to meet rising demand for dedicated cargo aircraft, they said in a statement.

About half of the air cargo carried worldwide normally flies in the belly of passenger jets rather than in dedicated freighters. But pandemic-related flight cuts due to weak travel demand have squeezed air freight capacity.

“The completion of our first A321P2F is timely, as the program can help airlines breathe new life into underutilized aircraft, which would otherwise suffer a harder landing in their residual value,” said Jeffrey Lam, president of ST Engineering’s aerospace division.

Advisory firm Ishka says the market value of a 10-year-old A321 passenger plane has fallen by 16% to $21.5 million since January, while the monthly lease rate is down 33%.

The first A321 converted freighter is operated by Qantas Airways Ltd QAN.AX on behalf of Australia Post and includes a large main cargo door which is hydraulically actuated and electrically locked, the joint venture said.

ST Engineering owns 55% of EFW, while Airbus holds the remaining 45%.

(This story corrects to reflect ST Engineering and its EFW JV with Airbus considering expansion, not Airbus directly.)

Reporting by Jamie Freed; editing by Jason Neely

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