Southern Air to take next two 777Fs in March 2012

Washington DC
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Southern Air expects to take delivery of its third and fourth Boeing 777 freighter in the first quarter of next year and the final two 777Fs from its original six-aircraft order in mid 2013.

The US cargo carrier took its first two 777Fs one year ago and placed them on a two-year wet-lease contract with Thai Airways International. Southern CEO Daniel McHugh tells ATI the initial 777F operation has done very well with Southern having at one point last year the highest on-time rating of all 777 operators as ranked by Boeing. He says Southern's next two 777Fs are now scheduled for delivery in March 2012 and the final two are slated to be delivered in mid 2013.

The Thai aircraft, which are based in Bangkok, are due to come off contract about the same time Southern takes its next two 777s. But Thai is considering renewing its contract and regardless of what happens with these two aircraft Southern is confident it will find customers to wet-lease all four 777Fs.

"There's a high degree of interest," McHugh says. "We're right on our marketing plan in terms of our next four aircraft."

He points out Southern is the only airline currently offering the 777F on the wet-lease market. While the 777F is more expensive to wet-lease than other widebody freighters and requires higher utilisation - the minimum commitment is about 400hr per month - it has superior range and fuel efficiency.

"The 777 is a more expensive aircraft but provides airlines much more marketability in cost per kilo and in reliability," McHugh explains.

About 70% of Southern's operation is wet-lease or ACMI while the remaining 30% is charters, including for the US military. In addition to the 777Fs, Southern now operates a fleet of 14 747-200/300s which are due to be replaced with 747-400 converted freighters starting later this year.

Southern is confident it can find customers for its growing 777 fleet and new 747-400SFs as it has seen a dramatic improvement in its business over the last year, coinciding with the recovery in the overall cargo market. McHugh says in 2010 revenues at Southern were up 44% over 2009 and block hours were up 35%.

"In the last year we've really been repositioning Southern Air. We have a different book of business. We've signed some fairly large customers like Malaysia Airlines to a multi aircraft deal," McHugh says, adding Lufthansa Cargo Charter Agency also was secured as a customer in 2010 and several existing customers opted to renew their contracts.