Bismillah Airlines, a small, all-cargo airline in Bangladesh, has agreed to lease two narrowbody Airbus freighters from Air Transport Services Group, which has made it a strategic priority to diversify business by leasing cargo aircraft to customers outside the United States, FreightWaves has learned.
ATSG (NASDAQ: ATSG) has leased an Airbus A321 converted freighter into Bangladesh, Chief Executive Rich Corrado said early last month during the TD Cowen Global Transportation Conference. Company officials declined to elaborate or identify the customer when contacted afterward.
A source close to the freighter leasing, operating and maintenance company said Bismillah Airlines has committed to lease two of the freighters, to be converted by 321 Precision Conversions, a joint venture between ATSG and an aerospace company that produces kits for converting used passenger aircraft into dedicated cargo jets.
The transaction fits with other publicly available information about Bismillah Airlines’ plans. The cargo operator, which is owned by the Mollah Group of Industries, recently told industry publication Cargo Facts that it is acquiring A321 freighters and expects delivery of the first aircraft by early next year.
Bismillah Airlines is one of six cargo carriers based in Bangladesh, but it doesn’t appear to currently have any aircraft under license. It once operated its own aircraft, including three Soviet-made An-12Bs, a Lockheed L-1011-1 and a Boeing 747-200. The new leases suggest the company, which could not be reached for comment, is preparing to resume service.
ATSG is a vertically integrated aviation company that buys secondhand aircraft, pays to have their interiors remodeled for transporting heavy shipping containers and offers services, including flying, that can be purchased a la carte or bundled with a lease. In the United States, Amazon and DHL sublease aircraft back to ATSG’s two cargo airlines to operate on their behalf.
ATSG has historically leased Boeing 767 medium widebody freighters but in July leased its first two Airbus A321 narrowbody freighters to Raya Airways, a scheduled all-cargo carrier in Malaysia. The Wilmington, Ohio-based aviation company is also expanding its aircraft offerings to the A330 converted freighter to attract operators that prefer Airbus products and to defend against the declining supply of 767 passenger jets still economically suitable for conversion.
ATSG also delivered 767-300 freighters in July to overseas customers Georgian Airlines, Cargojet in Canada and SkyTaxi in Poland.
The company is on track to lease 19 new aircraft this year, with three-quarters of them going to international operators hired by large express delivery companies that need capacity to meet strong e-commerce demand. ATSG has commitments for 16 new leases in 2024.
E-commerce is growing faster in many regions of the world than in established economies like the United States, and consumers are ordering goods that require more cross-border transportation.
Management says the company is well positioned to take advantage of an estimated 38% growth in e-commerce sales through 2027, with e-commerce shipping volumes expected to grow faster than the 3.5% to 4% annual rate of general air cargo.
“Some of those emerging networks are just forming now to fulfill the e-commerce needs of those geographic areas,” said Corrado. Executives say there is plenty of room to grow in markets such as Mexico, India, Brazil and Canada where e-commerce is still less than 15% of total retail sales.
It’s not known if Bismillah has an agreement to operate the A321s for an express delivery provider, but Corrado suggested that such relationships give ATSG confidence in the creditworthiness of overseas customers because their finances and capabilities have already been vetted.
“These airlines that we’ve leased to in other parts of the world generally fly for DHL, UPS, FedEx, and Amazon. That means although we’re not getting the good credits that we have with Amazon, with DHL and UPS, their customer, we know very well because their customer is also our customer,” he said Sept. 27 at a special ATSG briefing for investors in New York.
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