Public and private initiatives drive a sustainable aerospace industry in Abu Dhabi

Over the last decade Abu Dhabi has been pushing forward with plans to create a modern aerospace industry, involving the expansion of its portfolio of original equipment manufacturer (OEM) activities, as well as its aircraft maintenance, repair and overhaul (MRO) facilities. Abu Dhabi authorities also continue to invest heavily in aerospace research and development (R&D), with the aim of further developing the emirate’s domestic aerospace and defence industry capabilities.

Airshow

The November 2017 Dubai Airshow saw many far-reaching deals being signed. Tawazun Economic Council, the Abu Dhabi body leading the development of the emirate’s defence industry, signed an agreement with Boeing related to advanced materials manufacturing in the UAE. Projects connected to this include high-value exports; the manufacture of precision aerospace-machined parts; the creation of an aerospace-qualified surface treatment facility; production of advanced components for 777 and 787 aircraft; and production of raw material for the 777X programme. In total this is expected to generate around $1.5bn in economic activity.

Meanwhile, Mubadala Investment Company, one of the main drivers of economic diversification in Abu Dhabi, announced at the end of 2017 that it would be investing Dh82.5m ($22.5m) in R&D over the coming five years, with a strong focus on the fourth industrial revolution technologies, including 3D printing, digital manufacturing and advanced materials. At the same time, the company announced that it had signed a deal with US aerospace firm Honeywell, which specialises in industrial software, to launch products and services in the aerospace sector. The two companies are set to collaborate on introducing products and services in the areas of manufacturing, development and maintenance, and also the repair and overhaul of aerospace products across the Middle East region. Together, they intend to establish capability for three major auxiliary power units, including spares pool management, predictive maintenance and associated connectivity.

“We aim to be more focused on how we fuel growth across our aerospace businesses,” Badr Al Olama, director of aerospace at Mubadala, told OBG. “In the past we’ve been concentrated on quality development and ensuring that all assets deliver on commitments. However, we now see a broader goal of building this sector for Abu Dhabi. Aerospace cannot exist in isolation. It cannot be a business that only exists in one part of the world as it is global in nature. Therefore, we are aiming to spread out activities and be closer to OEMs.”

Russian state-owned firm Rostec and the UAE also entered into preliminary discussions regarding the joint production of a civil aircraft in Abu Dhabi, with the aircraft to be based on Russia’s new single-aisle twin passenger jet, the MC 21-400. In February 2017 Russia also initiated talks with the UAE over plans to co-develop a new generation fighter jet.

Airshow attendees were able to inspect the Calidus B-250 light attack turboprop aircraft, which is being manufactured by Abu Dhabi-based company Calidus. The company plans to build an industrial complex at the Nibras Al Ain Aerospace Park in the city of Al Ain in Abu Dhabi for the complete manufacturing of the fighter aircraft.

Aerospace Park

The Nibras Al Ain Aerospace Park is being jointly created by Mubadala and Abu Dhabi Airport Company as a platform to support the establishment of a sustainable aerospace industry in the emirate. The goal is to leverage existing Mubadala aerospace assets as well as bring in other global companies. Development began in 2012, with phase one of the 25-sq-km park – which involved construction of necessary infrastructure such as access roads and utilities – completed in 2016. Phases two and three – which will include the unlocking of critical infrastructure, and focus on attracting global OEMs, industry suppliers and related small and medium enterprises – followed in 2017 and is scheduled to be completed by 2030.

“We are placing close attention in our Nibras Al Ain Aerospace Park as we see it as a nurturing ecosystem to support aviation-related activities, but also create more wealth and GDP for the domestic economy,” Al Olama said. “Having existing assets, such as Strata, located there enable other suppliers to capitalise from them and begin selling products and services, while creating value for the economy,” he added.

Strata

One of the main players in the emirate’s aviation industry is Strata Manufacturing, an advanced composite aerostructures manufacturing company wholly owned by Mubadala. Strata was established in 2009 and is a tier-one supplier of components to Airbus and Boeing. At the 2017 Dubai Airshow the company signed a memorandum of understanding (MoU) with French company Assistance Aé ronautique et Aérospatiale, a major player in the aerospace industry for on-site operations, with the MoU aimed at furthering manufacturing support services and supply chain capabilities. The company also signed a joint venture deal with Belgian specialised chemicals firm Solvay to supply advanced aircraft materials, with both firms sharing equal shares in the project, which is set to be the UAE’s first supplier of pre-impregnated carbon fibres. The two parties are to build an 8500-sq-metre manufacturing facility in Al Ain, which will be commissioned in 2020.

Meanwhile, in April 2018 the company announced a contract with Boeing for the manufacture of composite empennage ribs for its new 777X aeroplane, with Strata carrying out this work at its facility in the Nibras Al Ain Aerospace Park. Strata already manufactures empennage ribs for the 777 and vertical fin ribs for the 787 Dreamliner, and this contract is the fourth that Boeing has awarded to Strata since 2013. In 2016 Strata also signed deals worth $1bn with Airbus for the manufacture of the horizontal tail plane for the Airbus A320, as well as inboard flaps for the Airbus A350-900.

In early 2018 Abu Dhabi Global Market (ADGM), the emirate’s financial free zone, announced that it was in the process of licensing three aircraft leasing companies: Dubai-based International Airfinance Corporation; and Irish aviation services firms Airborne Capital Limited; and Stellwagen Group. In 2016 ADGM introduced regulations enabling access to special-purpose aviation financing.

Possible Turbulence

In November 2017 Mubadala subsidiary Turbine Services and Solutions announced that it was soon to unveil details of one or more service facilities it was to build for the production of GE and Rolls-Royce engines. No further public announcements have been made on this front, however, and deals like this could be under threat due to the overextension of Abu Dhabi airline Etihad Airways, which posted an annual loss of $1.52bn in 2017. Etihad has 88 Airbus and 78 Boeing jets currently on order, with deliveries due to have commenced in 2018. However, it has been widely reported that Etihad is looking to cancel or delay some or all of these orders, with the airline looking to develop in a more sustainable way. Indeed, many expect a period of consolidation within Etihad before any further fleet expansion can take place.

While this is cause for concern, other deals both large and small are still taking place, which should help the sector continue to grow. In November 2017 Bell Helicopter appointed Abu Dhabi Aviation as an authorised customer service facility for the company’s 412s and 212s in the Middle East, while in April 2018 SACS Boysen Aerospace Group opened a new sales and support office in Abu Dhabi, with the privately owned German company looking to further grow its support for airlines and MROs in the region.