The changing shape of the global airline industry – with growing numbers of start-up carriers in emerging regions, without the infrastructure or funds to stock up on spare parts – is creating an opportunity for Mubadala Aerospace.
Its Sanad unit, set up four years ago as part of Mubadala’s push into maintenance, repair and overhaul, is combining the deep pockets of the Abu Dhabi investment fund and contacts through its other MRO houses – ADAT and SR Technics in Zurich – in a service which offers to finance, lease and manage components on behalf of airlines.
“We had $250 million of parts under management two years ago. Today that’s $700 million,” says Sanad chief executive Troy Lambeth. “We are now supporting 12 airlines directly and indirectly.” Although Sanad started with customers in the Middle East and Europe, it is now pushing further afield. A deal with Aeromexico “put us into the Americas and on to the [Boeing] 787", he says.
Sanad, says Lambeth, caters for “airlines from tier one to tier three” – they range from Etihad and Ethiopian Airlines to Fastjet, Flydubai and Air Berlin. “We can do sale and lease back deals on existing kit, or if you are getting into a new type – such as the 787 – we can provision for you,” he says.
As more airlines look at their cost-base and the logic of tying up cash in spares inventory, the market will grow, says Lambeth: “The industry is moving to an outsourcing solution. They have got to ask themselves, do you want to be in the maintenance business in 10 years time, or the airline business?”
However, original equipment manufacturers are also pushing harder into MRO, offering similar solutions to airline customers. But Lambeth believes Sanad can offer something different by providing a service across a range of components. “Sometimes we have partnerships with these OEMs and sometimes we compete,” he says. “But what we can provide is a soup to nuts solution. The OEMs cannot support that.”