Evergreen Airways (EVA Air), a Taiwan based airline and a member of Star Alliance, has reportedly reached an agreement with Boeing to change seven 787-10 on-order Dreamliners to three 777F cargo and four 787-9 aircraft.
After a rough financial first half of 2020, EVA Air reported an NTD46.5 billion ($1.3 billion) drop in passenger revenue (63.5% total). However, during the period from April to July of the same year, the Taiwanese carrier experienced a near 60% growth in cargo revenue.
This prompted EVA Air to act quickly. On August 31, 2020, the airline announced that it has reached an agreement with Boeing about changing seven undelivered 787-10s into three 777F freighters and four, less modern, 787-9s.
Originally, EVA Air had 20 787-10 Dreamliners on order, which amounted to about $7 billion. With changes made to the order, Evergreen Airways looks to save around $112 million with the new deal.
The shift in orders speaks a twofold story.
With passenger flights down by up to 90% and a slow recovery, IATA does not expect global traffic to return to pre-COVID levels until 2024. ACI is less optimistic, stating that it may take up to two decades for the aviation industry to come back to its projected levels of growth.
Belly capacity has dropped together with passenger flights, making air freight volumes significantly smaller but way more expensive.
In turn, cargo is becoming a focal point of operations in the aviation industry as carriers such as Finnair, Icelandair, Swiss International Air Lines and British Airways are converting their passenger aircraft into freighters. At the same time, Lufthansa (LHAB) (LHA) and Cathay Pacific have recorded significant growth in cargo revenue, while Korea Air managed to offset its financial downfall by diverting most of its resources to air freight.
The 787-9s, on the other hand, are less expensive than the newer 787-10s. Simultaneously, the older model Dreamliner has a better cruising range than its more modern counterpart, which would allow EVA Air to start long-haul international flights to the US once the market recovers.
