Two years ago at the air show, local hero Dubai Aerospace Enterprise was the region's emerging aerospace champion, announcing big plans to become a global leader in maintenance, aircraft leasing and training.

Since then, the city's economic troubles have stalled DAE's ambitions. Instead, Mubadala - the generously-backed state investment arm of Abu Dhabi - has taken over as the Gulf's playmaker to watch in the industry.

Over the past two years, Mubadala has announced a string of acquisitions and partnerships in the aerospace sector that have seen it become majority owner of Swiss-based maintenance, repair and overhaul group SR Technics and a major stakeholder (along with India's Tata) in Italian business aircraft maker Piaggio.

In Abu Dhabi itself it is establishing an aerostructures business in association with EADS and Italy's Finmeccanica. The venture - Strata - will open at the end of next year as part of a massive airport development at the emirate's second city of Al Ain (see box). Subsequent expansions are planned to take the total facility to more than 60,000m2 over the next few years.

Another strategic move for Mubadala could be into large business jet cabin completion. Although the company is not saying anything for now, Habib Fekih, president of Airbus Middle East, has said the European airframer is in talks with Mubadala, and DAE, about a number of joint ventures including a possible outfitting business in the UAE.

Mubadala's Abu Dhabi-based MRO unit, Abu Dhabi Aircraft Technologies, is also expanding its infrastructure and activities at its site at the emirate's main international airport. Foundations are being laid for an Airbus A380 hangar due to open in October next year, ahead of the arrival of its sister airline Etihad's first superjumbos in the second half of 2012 - their first C checks will be due in 2014. The company is also preparing to become a specialist centre for the new General Electric GEnx engine as well as the GE90, following an agreement signed with the power giant at the Paris air show in June.

"The move represents a step change in what ADAT has worked on so far," says ADAT chief executive John Byers. "We have done some GE90 work, but this will take us to module capability." Although Etihad remains ADAT's biggest customer - accounting for a third of revenues, with this figure set to grow as the flag-carrier's 43-strong fleet grows and matures - the company remains firmly focused on the third-party market, says Byers. He notes that other than a dip in cargo aircraft maintenance over the summer, the business has "not been too badly affected" by the downturn in the airline market.

Although ADAT is committed to "seeking synergies in terms of capabilities" with SR Technics, integration with the Swiss company is out of the question, he insists. "We handle different engine types and have only a very small area of overlap where we compete - on some widebody Airbuses. Otherwise, our two businesses are reasonably complementary."

Mubadala's growth in the aerospace sector contrasts with DAE's difficulties. Launched at the Singapore air show in early 2006, DAE under its former chief executive Bob Johnson embarked on an expansion spree that saw it acquire US MRO group Standard Aero, as well as a stake in SR Technics along with majority owner Mubadala. It also launched an aircraft leasing business with an order at the last Dubai show for 100 Airbus and 100 Boeing aircraft - at a total list price of around $27 billion - and with deliveries from 2010 to 2022. That business has since concluded a number of high-profile leasing deals.

Another apparent successful diversification has been its launch into aviation services with the acquisition of flugwerkzeuge aviation software (f:wz), a privately-held Austrian software firm that develops and distributes cost-optimising flight planning solutions for airlines for $25 million.

However, other ventures have been less promising. A high-profile attempt to launch a DAE university, offering degree courses in aviation-related subjects and incorporating a pilot training school, was abandoned.

In January this year, DAE was refinanced with a three-year $800 million loan from a consortium of banks. DAE group managing director Dr Omar bin Suleiman said at the time that the credit facility would "allow DAE to continue its impressive growth into a world-class global aerospace business. DAE is determined to support Dubai's continued emergence as a globally renowned aerospace centre and aviation hub."

How exactly the two aviation hubs of Abu Dhabi and Dubai plan to continue that emergence, what partners they will choose and how much will involve working closer together rather than as rivals, is likely to emerge during this week at the show.

Source: Flight Daily News