Boeing tips UAE as its major international client

Ivan Gale

• Last Updated: October 24. 2009 3:07PM UAE / October 24. 2009 11:07AM GMT

Boeing also sees potential for additional sales of its Apaches attack helicopters and Chinook transport helicopters to the Emirates. Jaime Puebla / The National

Long Beach, California // Boeing hopes to finalise defence contracts with the UAE and bid on new campaigns next month as the Emirates becomes a central element in its plan to boost international sales to counter declining domestic spending.

@Body:The US aerospace and defence giant is in talks with the Armed Forces and Mubadala Development, the Abu Dhabi Government’s strategic investment arm, on a broad set of initiatives and sales campaigns.

Those include military transport aircraft, air battle management systems and joint ventures ranging from aircraft maintenance to research and development and training.
“We think the UAE will be in our top five partners in the world going forward in not only sales but also partnerships,” said Jeff Johnson, the vice president of business development for Middle East and Africa at Boeing’s Integrated Defense Services (IDS) unit.

“The Emirates is one of those countries that is moving quickly and we are trying to move quickly with them.”

The UAE is boosting its armed forces with cutting–edge technology while also developing a home-grown aerospace and defence–services industry to wean itself off future dependence on oil revenues.

The Government announced in February its intention to buy four jumbo C-17 airlifters from Boeing at the International Defence Exhibition and Conference in Abu Dhabi, in a Dh4.7 billion (US$1.28bn) deal. The UAE has been in contract negotiations with Boeing since.

The deal provided a boost to the Boeing C-17 programme, which builds a heavy transport aircraft first produced in the 1980s and is now in danger of closing. Boeing will complete the last of its confirmed US Air Force orders for the aircraft in mid-2011 unless the US Congress decides to support the programme further. Boeing and other US defence contractors face dwindling orders from the US military as a deep recession threatens to end years of bumper orders for aircraft and material used in the Iraq and Afghanistan conflicts. The defence secretary Robert Gates is cutting funding for the F-22 Raptor fighter, made by Lockheed Martin and Boeing, because of prohibitive costs.

“I don’t think you will see for the foreseeable future any significant increase in acquisition dollars,” said Mark Kronenberg, the vice president of international business development at Boeing IDS.

“The president is debating a healthcare reform bill which is occupying 90 per cent of what the White House is doing now. That has got to get factored in.”
Meanwhile, Boeing’s commercial aeroplanes unit spent heavily in the third quarter to put its 787 and 747 programmes back on track after delays.

The company last week posted a $1.56bn quarterly loss overall, with its defence division booking a profit of $885 million and commercial aeroplanes reporting a $2.84bn quarterly loss.

Amid the declining commercial aircraft demand and uncertainty over US defence spending, Boeing is increasingly targeting international sales.

A decade ago, Boeing’s international defence deals amounted to 7 per cent of overall sales. That figure has risen to 16 per cent and the company wants to increase it to as high as 25 per cent.

Both Boeing and the UAE Armed Forces hoped to finalise a contract for the four C-17 Globemaster IIIs next month, Mr Johnson said. The UAE has an immediate need for the aircraft for military and humanitarian purposes, he said.

In addition, Boeing also sees potential for additional sales of its Apache attack helicopters and Chinook transport helicopters to the Emirates, Mr Johnson said.
The company, based in Chicago, is also looking to partner with Mubadala, which has already forged alliances with European firms such as EADS and Alenia Aeronautica as it starts an aerospace industry in Abu Dhabi virtually from scratch.

Torbjorn Sjogren, the vice president of international global services and support at Boeing, said the company may work with Mubadala to create an aerospace training programme or a military aircraft maintenance company in Abu Dhabi, much as Boeing did in Saudi Arabia when it started Alsalam Aircraft.

“Just as in Saudi Arabia, we are looking to work extensively with local industry in the UAE and specifically Abu Dhabi,” Mr Sjogren said.

There are also talks taking place between the two firms, Mr Johnson said, which could see them jointly invest in new aerospace technology in the future.

In addition, Boeing plans to bid for a UAE air battle management system next month, which is expected to be contested by the biggest US defence contractors including Lockheed Martin, Raytheon and Northop Grumman.

The company is proposing to supply the UAE with its NC3S, a “net-centric” IT system which integrates data from air and ground-based forces during conflicts.
“We’ve had some discussions and expect an RFP [request for proposal] to be out within 30 days,” said Jo-Ann Martin, the acting director of business development at Boeing IDS.

igale@thenational.ae