The cargo industry has shown underneath forecasted expansion fees for some yrs following the international financial disaster. This underneath-expected expansion fee has put force on delivery by using sea and air. For jet maker Boeing (BA) this has resulted in having to decreased its output on the Boeing 747 program with the possibility of having to get rid of it quicker or afterwards. In this posting, I want to have a glance at how many McDonnell Douglas MD-11 aircraft are still flying all-around and when most aircraft are up for substitution.

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Source: Aero Pacific Flightlines

Specs

The Boeing 747 and McDonnell Douglas MD-11 have a several items in prevalent, but vary on some points as very well. What they have in prevalent is that both equally aircraft are verified freighters and experienced a devoted freighter variant. The place they vary is of study course in the cargo ability and the McDonnell Douglas output has been halted for in excess of a 10 years now, when the Boeing 747 is still in output. On top of that, the devoted freighter and transformed freighter variants of the MD-11 are pretty very similar when variations for the Boeing 747 devoted freighters and transformed freighters are reasonably big.

On top of that, the McDonnell Douglas MD-11 is no extended in passenger assistance, which implies that there are no passenger variants still left for substitution.

Retirement age analyze

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Determine one: Common retirement age aircraft (Source: BOEING)

The principal question that requires to be answered is when the substitution cycle for the McDonnell Douglas MD-11 kicks in. In 2013, Boeing executed a analyze, and it demonstrates freighters are withdrawn from assistance when they get to the age of thirty-35 yrs, when it is twenty-twenty five yrs for passenger aircraft.

Due to the fact the MD-11 is only active on the freighter industry, the substitution age would be all-around thirty-35 yrs. The up coming action is to glance between the various McDonnell Douglas MD-11 and see how many of them are still in use and what their ages are.

Operators

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Source: WikiMedia

Table one: Deliveries McDonnell Douglas MD-11

In total, 200 McDonnell Douglas MD-11 aircraft were developed. Out of these 200 aircraft, 58 were devoted freighters. To determine the substitution prospective for recent technology aircraft it is crucial to see how many aircraft are still in procedure. For the MD-11, many aircraft have been scrapped, created off or stored. So, the true want for substitution is likely more compact than the 200 aircraft that were sent.

Table two: McDonnell Douglas MD-11 still in assistance

What we see is that out of the 200 aircraft, 122 are still in assistance with an regular age of 23.four yrs and 14 aircraft, which are not employed for spare parts, are in storage with an regular age of 23.6 yrs. For freighter aircraft, this is a reasonably younger fleet. The oldest MD-11 that is still in assistance is 27.5 yrs and flies for FedEx Specific (FDX). On regular, it would take at most a further 12 yrs for the MD-11 fleet to be retired.

Retirement peak

What makes items instead complicated is that it stays primarily unfamiliar which aircraft retires at what age. FedEx to begin with appeared to concentrate on the MD-11s to be taken out of assistance at thirty yrs, but appeared to speed up this phase out as demand for air cargo transportation remained weak. Nonetheless, we have lately noticed some restoration in the industry which could press that retirement age again to thirty yrs. In the past, freighter airways have been having their aircraft out of assistance at the age of 40. I think that is a little something that we will not see occurring, considering that airports have executed laws on emissions and noise degrees and Boeing has been doing work with airways to make freighter purchases more worthwhile. So that higher restrict for the retirement age of the MD-11 also ought to be at 35 yrs.

Subdividing the FedEx and UPS (UPS) fleets into blocks of 5 aircraft, every single with an regular age, we get the following overview of aircraft achieving both the thirty-year mark or 35-year mark:

What we see is that right up until 2030 all 122 aircraft in active assistance will have achieved the age of thirty. If that certainly is the retirement age then substitution ought to begin in 2021 and peak in 2023-2024. If the retirement age is more towards 35 yrs, then this peak is in 2028-2029. Both way, there seems to be a substitution cycle beginning in the up coming 10 years.

Replacement aircraft

What we see is that with no question, the Boeing 777F is the devoted freighter that suits greatest as the substitution aircraft for the MD-11F. The aircraft is heavier, but also transports more payload in excess of a even bigger length. The Boeing 767-300F is not a a person-to-a person substitution and the Airbus (OTCPK:EADSF) A330-200F also is more compact than the MD-11F.

Boeing has contemplated the launch of a passenger-to-freighter conversion program for Boeing 777-200ER, which would in shape pretty very well as a MD-11F substitution, but it seems that there is minor to no industry place for this aircraft as airways are working with their aircraft to the fullest in passenger assistance. On top of that, Boeing is likely more willing to promote the Boeing 777F to airways.

Orders

Whilst there seems to be want for a substitution someplace in the up coming 10 years, so far minor to no orders have been put for aircraft that can carefully match the capabilities of the MD-11F. FedEx has a total of 69 aircraft on order, but these will be employed to swap aircraft other than the MD-11F. Now the airline has only sixteen Boeing 777F aircraft on order with Boeing for a fleet of 57 aircraft that will want substitution. With the recent expansion forecast for the air cargo industry, the MD-11F requires a substitution which opens up chances for Boeing to promote an added 40 Boeing 777F aircraft to FedEx to be sent in the up coming 10 years.

UPS has 14 Boeing 747-8F aircraft on order with selections for a further 14 aircraft. These aircraft are likely to be employed for substitution of the Boeing 747 freighters in the UPS fleet, when the other 14 units could be employed for growing the fleet. Alternatively, the 14 selections could be transformed to orders for the Boeing 777F which would swap the MD-11F. With 37 MD-11 aircraft in the fleet and 14 achievable existing orders to be transformed, there ought to be at minimum twenty-twenty five more orders to swap the MD-11F fleet.

Lufthansa (OTCQX:DLAKF) Cargo operates a total of 12 MD-11F aircraft with two aircraft in storage. The airline previously requested the Boeing 777F aircraft and seems to be happy with the general performance of the Boeing 777F aircraft. I deem it likely that the airline will location a adhere to up order for at minimum 10 Boeing 777F aircraft in the future to swap its MD-11F fleet.

Summary

The MD-11F substitution cycle will likely peak in 2023-2024, but so far only a several orders to swap the MD-11F have been put. This has to do with the fact that there is no force to swap the MD-11F as they are pretty low-priced to run in the recent setting with small depreciation and reasonably small gasoline costs. On top of that, freighter airways are likely to commit to purchasing aircraft as late as achievable to see how the cargo industry develops. This way the carriers can align ability with demand.

All with all, the full MD-11 fleet is ripe for substitution in the forthcoming 10 years and the 3 most important MD-11 operators could order as considerably as 75 Boeing 777F jets.

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Disclosure: I am/we are prolonged BA.

I wrote this posting myself, and it expresses my have opinions. I am not acquiring payment for it (other than from Trying to get Alpha). I have no company romantic relationship with any enterprise whose stock is mentioned in this posting.

Editor’s Observe: This posting discusses a person or more securities that do not trade on a important U.S. exchange. Be sure to be aware of the hazards connected with these shares.

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