Moving stuff, not people: Firm converts grounded jets to haul cargo

LOD, Israel — The passenger doors on the jumbo jet were just too small. So engineers at Israel's main airport sliced a new hole the size of an SUV into the side of the fuselage — and hoisted a massive hatch into place.

In many ways, it's the doorway to the post-pandemic future of the battered airline industry.

As global tourism struggles to its feet after two harrowing 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 jets for global giants like Amazon and DHL. The work reflects what analysts think is a permanent, pandemic-driven boom for shipping the stuff people buy.

To adapt, Israel Aerospace Industries early in the pandemic sped up and expanded what amounts to its assembly line. The sales pitch: At about $35 million an aircraft, the metamorphosis is a bargain compared to buying a new cargo plane four or five times that price. Now, the company says, it transforms about 25 planes a year, up from about 18 annually before the onslaught of COVID-19.

The company has emerged as a top player in this market, competing with others like Boeing. Its numbers continue to grow, and IAI officials say orders are booked for the next four years.

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

Next year, the company expects to convert even bigger 777s — the first in the world, he says, with the work at a new plant in Abu Dhabi. That's partly a result of the U.S.-brokered "Abraham Accords," which formally established relations between Israel and the United Arab Emirates. And it's a sign, Kuzi says, of the demand for converted jumbo jets.

Analysts say the explosive growth in online buying is likely to settle a bit as the pandemic wanes, inflation rises and people spend less time at their laptops. But the cost of shipping goods, exacerbated by tangles in the supply chain, is expected to challenge even the largest businesses. Amazon, for example, pointed in part to rising shipping costs when it boosted its Prime membership on Feb. 18 from $119 to $139.

Before the pandemic, 50% of all global air cargo traveled in passenger planes. But when the pandemic began, some 80% of passenger planes stopped flying. The price of freight shipped by sea soared.

Air freighters needed a workaround — and grounded passenger planes provided one.

Through 2025, Kuzi says, IAI is booked with conversions, a sprawling engineering and technical process that takes about three months. The company earlier this month announced it had completed its 100th conversion of a 767-300. IAI, Kuzi said, leads the world's conversions of that 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 hulking 767s, one formerly belonging to Delta, stood in different stages of transformation.

When they're done, each will be able to carry about 60 tons of goods on two floors.