Mubadala bags $130m new deals

Mubadala Development Company (MDC), the Abu Dhabi-based-business development and investment company, has secured deals worth $130 million (Dh477m) through a new venture set up to provide financing for the aerospace industry.

The new unit, Sanad Aero Solutions, will deliver new capital for airlines and original equipment manufacturers (OEMs) alongside a growing number of services from Mubadala's maintenance, repair and overhaul (MRO) companies, including SR Technics and Abu Dhabi Aircraft Technologies (ADAT), Mubadala said in a statement, yesterday.

In its initial two deals, Sanad has signed a 10-year contract for 12 spare engines valued at $100m with German carrier Air Berlin. This involves engine maintenance work for a major part of the carrier's fleet, to be undertaken by SR Technics.

The second deal will see Sanad providing component financing worth more than $30m over a 10-year period for the Airbus fleet of Abu Dhabi's Etihad Airways. Under this contract, ADAT will provide onsite technical and logistical support.

Asked how many airlines Sanad was in talks with, a Mubadala spokesperson told Emirates Business: "We are currently talking to a number of other airlines across the world about possible component financing deals. One of the strengths of the new venture is the ability to operate in many different markets."

Mubadala Aerospace, a business unit of MDC, estimates that currently about $45 billion worth of spare parts are held globally with carriers spending in excess of $40bn on maintenance annually. It said the number of commercial aircraft in operation was expected to increase to more than 27,000 by 2020, an increase of over 5,000 airitcraft, taking annual maintenance costs above the $60bn mark.

According to Homaid Al Shemmari, Executive Director, Mubadala Aerospace, the company's maintenance operations are attracting interest from airlines across the globe. Speaking at the Singapore Airshow yesterday, Al Shemmari said: "We believe that by offering component and engine financing solutions to airlines and OEMs in partnership with our network, we are able to provide a truly integrated service."

When quizzed on the scale of financing required by regional airlines, the Mubadala spokesperson did not specify an amount, but said: "The aerospace sector has been hit hard by the global economic downturn but the situation is improving. Sanad can provide liquidity and a one-stop solution for airlines looking to free up capital on their balance sheets and benefit from our MRO expertise."

Mubadala has a tie-up with Airbus to build components for the Airbus A380. It also recently signed a framework deal with Boeing for collaboration in several areas.

Aimed at expanding its global footprint, Mubadala is also in talks with European Aeronautic Defence and Space Company (EADS), the parent company of Airbus, for investments in manufacturing in Europe, Chief Executive of EADS, Louis Gallois, recently told this newspaper. He said then: "We are in discussions with Mubadala on investments in Europe in the field of our activities."

 

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