Abu Dhabi is solidifying plans to become a global aviation powerhouse, signing new deals on manufacturing at this week's Dubai Air Show.
Aviation hopes take off
Abu Dhabi is solidifying plans to become a global aviation powerhouse, signing new deals on manufacturing at this week's Dubai Air Show in contrast to a scarcity of transactions for new aircraft. Boeing and Airbus have signed new agreements to bring Abu Dhabi and its strategic investment arm, Mubadala Development, into their global supply chains as a composite parts maker. And SR Technics, a European aircraft maintenance company majority owned by Mubadala, said it was in the process of building a global repair business with its sister company, Abu Dhabi Aircraft Technologies (ADAT), and Mubadala's support.
The UAE capital is becoming the "new playmaker" in aviation, said Bernd Kessler, the chief executive of SR Technics. "Abu Dhabi is going to play a significant role in not only MRO [maintenance, repair and overhaul] but manufacturing, research and development," he said. Mubadala is pursuing joint ventures with nearly all of the top aerospace and defence firms to set up local businesses in the emirate. A watershed moment came when Mubadala entered into a strategic business alliance with GE of the US last year, covering collaboration and joint investment into aircraft engines, commercial finance, health care and clean energy.
"That hit closest to home," said Marty Bentrott, the regional vice president of sales at Boeing. "That this was more than just providing engines and medical equipment, this is really about tying up a business relationship with investment." The investment firm's financial strength is being put to use to enter capital and energy intensive businesses. At SR Technics, Mr Kessler said he was "extremely happy" Mubadala had increased its stake by purchasing the shares of two investment firms based in Dubai earlier this year. "With one shareholder this has brought clarity, and we now belong to Mubadala's MRO umbrella." With financial support from Mubadala, SR Technics announced yesterday plans to build a new aircraft maintenance facility in Malta to service the narrow-body fleet of European airlines.
Mubadala's plans to make Abu Dhabi an aviation hub have dovetailed with other initiatives including US$50 billion (Dh183.5bn) in planned investments for Etihad Airways and Abu Dhabi Airports Company for new aircraft, and a new airport terminal to accommodate them with the Midfield Terminal in 2015. This week, Etihad signed a number of deals to improve its service offerings, including awarding ADAT a deal to upgrade seating and in-flight entertainment systems on 16 aircraft. ADAT is also building a maintenance hangar to accommodate Etihad's growth, which at 32,000 square metres will be able to handle three Airbus A380 superjumbos simultaneously. Like other Mubadala initiatives, ADAT has it sight set beyond the UAE, targeting a regional airline market.
In aircraft composites manufacturing, Mubadala's subsidiary, Stata Manufacturing, has already attracted Boeing and Airbus and this week the world's number three aircraft manufacturer, Bombardier, signalled it could be interested as well. "What they are doing with Airbus and Boeing is good because it is an endorsement from those companies and will get them started, and we can jump on that bandwagon," Gary Scott, the president of commercial aircraft at Bombardier, said yesterday. He said it might take "a few years" for Strata to prove itself after delivering its first parts, to Airbus, by the end of next year.
As a major purchaser of defence and arms, including F-16 fighter jets and Patriot defensive missiles, the UAE is also becoming a magnet for foreign firms using the capital as a regional hub for after-sales service and support. Both foreign and local companies are being attracted into the defence field to take advantage of an Armed Forces' campaign to outsource its "non-core businesses", such as maintenance services, to private industry.
Locating a missile maintenance and assembly facility in the emirate would be a "natural choice", said Florent Duleux, the vice president of Middle East export sales at MBDA, the French missile firm. He said his firm was in discussions to set up such a facility at an industrial park being planned by the state-owned Tawazun Holding. "Abu Dhabi is attracting something unique and attractive for companies, especially in defence."
Yesterday, Lockheed Martin said it was committed to forging a "100-year relationship" with the UAE and was also negotiating a joint venture with Mubadala for an aircraft maintenance business for the Gulf's air force fleets. "We are very close to an agreement," said Willy Moore, the UAE chief executive for Lockheed Martin Global and a former naval commander of the US Fifth Fleet. "I think their aviation plans are gaining momentum."
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