Legacy of the pandemic: an Israeli company transforms jets for cargo

LOD, Israel – The jumbo jet’s passenger doors were just too small. So engineers at Israel’s main airport cut a new SUV-sized hole in the side of the fuselage – and hoisted a massive hatch into place.

In many ways, it’s the gateway to the battered airline industry’s post-pandemic future.

As global tourism struggles to recover from two trying years of coronavirus restrictions, Israel’s state-owned aerospace company is cashing in on the growth of e-commerce by converting grounded passenger planes into cargo planes for global giants like Amazon and DHL. The work reflects what analysts believe is a permanent, pandemic-driven boom to ship what people are buying.

To adapt, Israel Aerospace Industries at the start of the pandemic accelerated and expanded what amounts to its assembly line. The sales pitch: At around $35 million per plane, the makeover is a bargain compared to buying a new cargo plane four or five times that price. Today, the company says, it transforms about 25 planes a year, down from about 18 a year before the onslaught of COVID-19.

The company has become a leading player in this market, competing with others like Boeing. Its numbers continue to grow, and IAI officials say orders are on the books for the next four years.

“It’s about the relationship between passengers and cargo and the pandemic,” said Shmuel Kuzi, executive vice president and general manager of the company’s aviation division. He says IAI now converts Boeing 737s and much larger 767s.

Next year the company plans to convert even bigger 777s – the first in the world, he says, with work at a new factory in Abu Dhabi. This is partly the result of the “Abraham Accords”, brokered by the United States, which formally established relations between Israel and the United Arab Emirates. And that’s a sign, Kuzi says, of the demand for converted jumbo jets.

Analysts say the explosive growth of online shopping should level off a bit as the pandemic abates, inflation rises and people spend less time in front of their laptops. But the cost of shipping goods, exacerbated by supply chain entanglements, is expected to challenge even the biggest companies. Amazon, for example, partly underlined higher shipping costs when it increased its Prime membership on Feb. 18 from $119 to $139.

E-commerce jumped by double-digit percentages at the start of the pandemic, accelerating a trend driven by shutdowns that kept people indoors. Instead of travelling, people ordered online and expected fast door-to-door service.

This is a big part of why demand for cargo planes has held up throughout the pandemic.

Before the crisis, 50% of all global air freight traveled on passenger planes. But when the pandemic started, some 80% of passenger planes stopped flying. The price of sea freight is soaring.

Air freighters needed a workaround – and ground-based passenger planes provided one.

Eytan Buchman, marketing director of Freightos, a Jerusalem-based booking platform, said one of the easiest and most cost-effective ways to increase capacity was to convert passenger planes to freighters.

Meanwhile, individuals and businesses should continue shopping online.

“People are always stuck in the mindset of ‘I want to buy more stuff,'” Buchman said. But he expects a “rebalancing” as the pandemic subsides.

For now, even though air travel is starting to rebound, the number of passengers traveling remains well below pre-pandemic levels.

“We don’t expect the recovery of the passenger network to take place for several years,” said Glyn Hughes, chief executive of the International Air Transport Association. Air cargo demand, he said, is expected to grow by 5% a year.

The International Trade Administration, part of the US Department of Commerce, predicts that global e-commerce sales will continue to grow steadily at around 8% per year through 2024.

Richard Aboulafia, managing director of Aerodynamic Advisory, a Michigan-based consulting firm, said that while demand for refitted planes is robust, there is a danger that IAI and others are betting too much on the market. “There is this risk, will demand remain high?” he said.

Until 2025, Kuzi says, IAI is for conversions only, a sprawling engineering and technical process that takes about three months. The company announced earlier this month that it had completed its 100th conversion of a 767-300. IAI, Kuzi said, is leading global conversions of this model.

The transformation involves much more than removing seats and installing new doors.

On a recent day at the company’s campus a few miles from Ben Gurion International Airport, three towering 767s were in various stages of transformation. The air swirled with drills, the rush of ventilation, and the noise of equipment being installed or removed.

Outside the hangar, workers carried blue leather passenger seats away from an airliner, formerly owned by Delta, which had just arrived and parked on the tarmac. A pile of yellow oxygen masks, tubing and ceiling panels pushed up a catwalk as workers gutted the fuselage, which displayed an American flag. Forward of the dark, cool interior, the first class section and cockpit were – for the time being – nearly intact, a testament to how this space had been used in what became known as ” before time”.

Two other 767s inside a nearby hangar offered a glimpse of the next steps in the conversion process.

The two behemoths stood on specially designed supports, surrounded by scaffolding several stories high.

The opening of the new cargo door was gaping. Inside, engineers and technicians installed new flooring and panels along the walls. Another crew rewired the cockpit. The only sign that it had ever served another purpose was a red maple leaf covering the tail and faded letters spelling out “Canada” emblazoned in red on the fuselage.

When this is done, the plane and all the others will be able to carry about 60 tons of cargo on two floors.

Everyone cleared away while an overhead crane, attached to a pulley and cables, hoisted the five-meter-wide (16.5-foot-wide) loading door to the opening. Two men in a cherry picker, engine roaring, guided the door from the ground up to the fuselage and into place.

“The pandemic is making e-commerce very, very popular,” Kuzi said. “So in this case, it was a good thing for us.”

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