Abu Dhabi aerospace takes off

Original Article

by Jason J. Nash, Oxford Business Group

Dhabi has turned up the heat in the Gulf's aerospace race, going head to head with fellow emirate Dubai in a bid to become the region's leading aviation industry hub.

During the Paris Air Show, Abu Dhabi's Mubadala Development Company signed two key agreements with US aviation firms that will strengthen its drive to become a leading player in the aerospace industry.

On June 19, state-owned Mubadala formalised a memorandum of understanding (MoU) with Lockheed Martin envisioning joint co-operation in aerospace projects in Abu Dhabi and across the region.

Waleed al-Mokarrab al-Muhairi, Mubadala's chief operating officer, said the agreement would allow the two companies to develop and align their activities to attract other strategic partners to provide full-service, end-to-end, military aircraft support.

"This MoU signifies our mutual interest to explore ways in which we may collaborate and address sustainment, maintenance, repair and overhaul, engineering and technical support of military aircraft," al-Muhairi said. "We see an opportunity in creating sustainment programmes across several platforms, such as the F-16 Block 60 Desert Falcon, C-130 Hercules, Mirage 2000, Hawk and PC-7."

Ralph Heath, the executive vice president of aeronautics at Lockheed Martin, said the agreement was not limited to military, transport and cargo aircraft.

"The agreement is open to working in partnership with other UAE entities and global aerospace organisations," he said. "It is a highly strategic move to position ourselves with our affiliates in the region."

Under the agreement with Lockheed Martin, the two companies will also look into other avenues of aerospace development activity, particularly research and development.

The day before, Mubadala signed another agreement with international aviation company Boeing that will see the two firms set up an aerospace research and development centre in Abu Dhabi. It also establishes mechanisms to identify potential partners and suppliers for the production of advanced aerospace components and raw materials in the emirate.

Jim Albaugh, president and CEO of Boeing's Integrated Defense Systems, said that the MoU with Mubadala showed his company's faith in the viability of the Middle East's aerospace sector.

Founded by the government in 2002, Mubadala has been tasked with establishing new firms or buying into existing companies at home and abroad to help develop and diversify the emirate's economy. One of the key areas of investment it has focused on is the aviation industry, widely seen in the Middle East as having major growth potential.

Among its existing aerospace holdings, Mubadala's assets include Horizon International Flight Academy, a 35% stake in Piaggio Aero Industries, a 40% stake in Swiss aircraft services provider SR Technics, and Gulf Aircraft Maintenance Company, an Abu Dhabi aircraft maintenance company.

The plunge into the aerospace industry is in line with Abu Dhabi's high-tech vision of the future in which supplying energy resources will play a much smaller role.

"We are looking to diversify our economies," said al-Muhairi. "We are good at hydrocarbons but we need to think about what comes next. Aerospace creates the type of jobs we need [...] and these are highly skilled jobs."

However, Mubadala faces stiff but friendly competition from DAE for pole position in the region's aerospace industry, with the Dubai corporation committed to investing more than $15 billion in the next five years to develop a home grown aviation industry.

The same day that Mubadala signed its MoU with Lockheed Martin, DAE also inked an agreement with Boeing to investigate establishing a long-term collaboration utilising their joint expertise in areas such as aircraft services, financing as well as maintenance, repair and overhaul.

Though Mubadala has not announced how much it is intending to invest in its aerospace ventures, some analysts have put the figure as much as $5 billion.