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Cutting metal

01 March 2005

The world air cargo market is growing and much of this growth will be reliant on converted aircraft. But as Alexandra Cain discovers, knowing which conversions to finance and when, can be a tricky process.

Tags: BAE Systems  |  Cargolux  |  AirFrance  |  Cathay Pacific  |  Airfinance  |  Aircraft value  |  aircraft financing

Banks tend to focus on new shiny aircraft. They track aircraft orders and follow sales campaigns but few care about what will happen after 12 years (at least until deals go wrong).
This short-sightedness means that few banks have ever studied the cargo market. They may have bid for a new Cargolux, Air France or Cathay Pacific 747 freighter - but  they have not  looked at conversions.
This means that they are missing out on one of the fastest growing aviation markets.
Recent forecasts by the large manufacturers have revealed that their predictions for world air cargo traffic are rising – and almost three-quarters of this demand will be filled by  converted aircraft. If this happens, airlines must be able to finance these conversions.
 Passenger-to-freighter conversions  can cost anywhere between $4.5 million to $25 million - and when maintenance is added it can easily cost more than this. The problem...

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