$1bn aerospace cluster for Al Ain

ABU DHABI // Abu Dhabi firms will this week reveal details of a US$1 billion (Dh3.67bn) aerospace cluster in Al Ain and several Gulf carriers will make major orders at an otherwise subdued Paris Air Show beginning tomorrow. Mubadala Development, the investment arm of the Government, and Abu Dhabi Airports Company (ADAC) are jointly developing a centre in and around Al Ain International Airport for aerospace manufacturing and services firms. ADAC is due to sign a partnership with bavAIRia Aerospace Cluster, a German business association, to develop the centre. "We look forward to making a number of significant announcements here at the show," said Khalifa al Mazrouei, the chairman of ADAC. The company hopes dozens of small to medium-sized firms will relocate to the facilities next to the underused airport to create a an aerospace community around Mubadala's carbon fibre manufacturing plant. The biennial air show at Le Bourget Airport is one of the biggest events of the industry, along with the Farnborough Air Show and the Dubai Air Show. This year, a gloomy outlook for global aviation and the Air France tragedy are expected to cast a pall over the week-long proceedings. Airlines lost an estimated $10.4bn last year and will bleed another $9bn this year due to a severe drop in demand. Air traffic worldwide is falling faster than in 2001, the year of the September 11 attacks in the US, and the International Air Transport Association (IATA) said passenger traffic would decline 8 per cent this year, and cargo by 17 per cent. "Given the limited visibility, we are not expecting there to be any bold statements about a recovery [in airlines] at this stage," Rob Stallard, an analyst with Macquarie Research, wrote in a note. The aircraft makers Boeing and Airbus, which saw record sales years in 2007 and last year, are expecting their annual order tallies to be cut drastically this year. Although the two have more than five years of orders to process, cancellations and deferrals have forced them to cut production on some aircraft types by as much as 30 per cent. "I expect to see the big players of the industry placing their bets; articulating their strategies on how they are planning to strengthen their presence into the service business," said Damien Lasou, the managing director of the global consulting and technology services company Accenture, based in Paris. "I expect as well to understand how these companies are shaping their new offering, shifting from selling a product to selling a solution." Gulf airlines were feted as industry saviours at previous air shows with their large orders, such as Qatar Airways's $16bn order for Airbus planes at the Le Bourget event two years ago. But the big three, Emirates Airline, Qatar Airways and Etihad Airways, have mostly finished their ambitious fleet expansions. Gulf airlines already have a reported 564 aircraft worth $135bn on order, and are not expected to make any multibillion-dollar orders this year. The exception could be Qatar Airways, which has planned announcements tomorrow and Tuesday. The Doha-based carrier recently said it was no longer interested in CSeries, Bombardier's new entry into single-aisle aircraft, and could instead announce orders for narrow-body aircraft from Airbus or Boeing. Qatar Airways already operates 22 Airbus A319s, A320s and A321s single-aisle aircraft, and has another six on order. Etihad said it would also make announcements at the show, but after a record deal for up to 205 aircraft from Boeing and Airbus last year at the Farnborough Air Show it is also not expected to announce significant new aircraft orders. Mubadala is expected to reveal further details of its carbon-fibre manufacturing plant in Al Ain to produce parts for the European aircraft markers Airbus and Alenia Aeronautica, as well as its planned military aircraft maintenance business, which is being developed in partnership with Sikorsky Aerospace Services. Mubadala's investments have focused on developing the emirate's economic diversity and intellectual capital, and it is participating in the cluster because of its focus on aerospace as a core industry for the Emirates. At the Farnborough Air Show last summer, Mubadala signed a 10-year agreement with EADS, the parent company of Airbus, to produce spoilers and flap track fairings for the Airbus A330, A340, A350 and A380. Future plans called for Mubadala to elevate its role as an Airbus supplier, with plans to make primary structures and components. Mubadala will invest $500 million in the Al Ain composites plant, which is expected to be operational next year. igale@thenational.ae * with Reuters