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Abu Dhabi Cultivating the MRO Market
Aviation Maintenance. 28.4 (Apr. 15, 2009):
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A new airline, a recently rebranded MRO and a major airport expansion program all add up in an effort to make the largest of the United Arab Emirates a preeminent aerospace hub.

By David Jensen, Editor-At-Large

When Etihad Airways announced at last summer's Farnborough Air Show that it is buying Airbus and Boeing aircraft worth a total of $21.4 billion, the Abu Dhabi-based carrier did more than cause a supersonic stir among show attendees. The orders represent just part of a multi-billion-dollar plan to make the capital of the United Arab Emirates (UAE) one of the most important aerospace hubs in the world. Such an aircraft buy has caused a ripple effect, prompting significant expansion at Abu Dhabi Intl Airport (AUH), as well as at the maintenance, repair and overhaul (MRO) company contracted to support Etihad's aircraft, Abu Dhabi Aircraft Technologies (ADAT).

Posting one of the largest aircraft orders in history, five-year-old Etihad purchased 55 Airbus aircraft - 20 A320s, 25 A350 XWBs and 10 A380s - and 45 Boeing aircraft - 35 B787s and 10 B777-300ERs. Include the options and purchase rights for an additional 105 aircraft from both Airbus and Boeing, and you have an entire buying binge worth more than $43 billion.

Etihad plans to have A320s and B777s enter service in 2011, the A380 a year later, and the B787 in 2015. GE90 engines will power the B777, and Rolls- Royce Trent engines the A350 XWBs. As this is written, the engines for Etihad's A380s, A320s and B787s remain in negotiation.

Etihad clearly plans meteoric growth. The carrier now flies 38 aircraft (mostly Airbus models and B777s) to 45 destinations, but it plans to reach 70 international destinations by 2010. Etihad carried more than 4.6 million passengers in 2007 - more than 13 times the number carried just three years prior - and it intends to capitalize on the prediction that 7.5 million tourists will be visiting Abu Dhabi by 2030. The airline's expansion is part of Abu Dhabi's 10-year, $200-billion effort to promote tourism and residential development in the country. This, in turn, is to help establish a more diversified economy that is less dependent on oil revenue, according to James Hogan, Etihad's chief executive.

Preparation at ADAT

When Abu Dhabi decided to establish Etihad, it withdrew as a hub for Bahrain-based Gulf Air, a carrier that served the UAE for more than 35 years. In 2007, the government of Abu Dhabi transferred the entire shares of the Gulf Aircraft Maintenance Co. (GAMCO) to the government-owned investment company, Mubadala, which renamed the company Abu Dhabi Aircraft Technologies. The transfer was made with the intent of establishing the new company as the number- one independent MRO in the Middle East, able to draw business from Europe, Africa and India.

Little seems to be standing in ADAT's way. Already the 12th largest MRO in the world, ADAT has enjoyed 15 to 20 percent annual revenue growth and is targeting an $800-million revenue stream by 2012. Etihad provides 25 percent of ADAT's business, but the MRO also has contracts with other Middle East airlines, including Qatar Air and Turkey's Onur Air, and with Russian carriers, such as Transaero Airlines, and European carriers, such as UK-based Thomas Cook Airlines and Belgium-based DHL.

It has a number of Total Care customers, offering them a full range of support services. "With our extensive experience and capability, our key commercial strategy is to grow our Total Care customer base."

While ADAT is expanding its operations to accommodate airline growth region-wide, it clearly must emphasize preparation to support Etihad. The MRO has a five-year, $500-milllion contract with Etihad to provide Total Care services ranging from technical support of the fleet, to line and heavy A- and C-checks, to component and engine support. Signed in November 2007, the Etihad agreement is ADAT's first major contract since rebranding.

More Hangar Space

To accommodate Etihad's business, in Dec. 2008 ADAT completed construction of a dedicated Etihad single-bay hangar for line and light maintenance on the carrier's fleet of A320, A330, A340 and B777 aircraft. In addition, a $12-million single-bay paint hangar began operations in Feb. 2009. And ADAT management recently approved the construction of one of the world's largest open-span hangars. Planned largely for widebody aircraft, the proposed new facility is scheduled to be in service by early 2010, according to Ian Wolfe, chief commercial officer for ADAT.

Original plans called for a $75-million structure with 96,000 square feet (8,920 square meters) of floor space, sufficient for four widebody bays. It also would include 21,000 square feet (1,950 square meters) for housing workshops and support, especially to expand ADAT's work on interiors. "Etihad, in particular, places heavy emphasis on cabin appearance, ADAT needs to match these demands both by way of capacity and capability," says Wolfe. Current construction estimates (in mid-March) have gone up to around $90 million.

Regardless, ADAT recorded more than 1.8 million man hours in 2007, and with the proposed expansion providing up to a 35 percent increase in working capacity and capability, the company is confident it can raise that figure to well over 2 million man hours once the new facilities are operational.

The Mubadala Development Co. also recently announced the launch of a joint venture with Rolls-Royce to offer On-Wing Care - line maintenance services, from boroscoping to engine changes - for the Trent family of engines through ADAT. Joining a worldwide Rolls-Royce network of maintenance centers, the new entity also will provide asset management service for engine system accessories.

"We're not yet a dedicated Rolls or GE shop," says Wolfe. "But we're talking to both companies." With an engine test stand that can accommodate engines up to 100,000 pounds of thrust, ADAT is capable of fully supporting the CF6-80C2, CF6-50C1/2 and CFM-56-5A. The company also can perform modular change and test services for the Trent 700.

Already a Large MRO

Etihad's expansion supplements an already large MRO center. On the southwest corner of Abu Dhabi Airport, adjacent to Terminal 3, ADAT has its main facility, a 323,000-square-foot (30,000-square-meter) hangar adjoining 1.5 million square feet (140,000 square meters) of apron space.

Several years ago, ADAT built a second hangar for commercial airplanes, which can accommodate three widebodies or a single A380. And the MRO has still another, four-bay hangar at AUH to provide heavy maintenance for commercial widebody aircraft and another two-bay facility for military C-130 customers.

ADAT is a Lockheed Martin-authorized C-130 service center, able to provide depot-level maintenance, progressive inspections, avionics upgrades and modifications, and corrosion repair and nondestructive testing (NDT) on the military turboprop.

All told, ADAT will have six hangars at Abu Dhabi Intl Airport, and depending on the final design of its proposed new hangar, it will have as many as 10 to 12 bays for maintenance, overhaul and paint. In addition to the line maintenance center at the airport, ADAT has comparable facilities at Sharjah Intl, RAK Intl, Al Ain Intl and the Al Bateen and Al Minhad airbases.

Abu Dhabi Aircraft Technologies offers a broad range of support services: heavy airframe maintenance, structural modifications, wheels and brakes, NDT and maintenance of seats, interior panels and other interior components. Its composite repair workshop can perform repairs on carbon fiber, fiberglass and honeycomb structures. ADAT can provide heavy C-check maintenance on essentially all Airbus and Boeing aircraft, as well as on the Lockheed L1011 TriStar (operated by the Royal Air Force) and L100 (civil C-130). In 2007 it completed heavy maintenance on 700 aircraft.

In addition, ADAT offers a variety of fleet management services, including technical acceptance of new aircraft, phase-out of old aircraft, maintenance planning and scheduling, vendor management, performance monitoring and airframe, engine, component and materials management. These services are offered to several operators in the Middle East and East/CIS (Commonwealth of Independent States) region.

As part of its goal to becoming an international aerospace hub, ADAT has secured certification from 25 airworthiness authorities, including from the U.S. FAA, the European Aviation Safety Agency (EASA) and the UAE's General Civil Aviation Authority (GCAA). The company's efforts to provide a healthy and "green" operation has helped it gain ISO 9001, ISO 14001 and Occupational Health and Safety Advisory Service (OHSAS) 18001 certifications.

Technicians Needed

While ADAT has no shortage of maintenance bays and certifications, it does face the universal problem among MROs of securing qualified personnel - and its dramatic expansion exasperates the problem. ADAT currently has about 3,000 employees, including 300 to 400 contract workers, "to cover a surge in demand," says Wolfe.

"Our technicians are resourced from various places," an ADAT official adds. "They come from India, Sri Lanka, Europe, South Africa, from all over the world." In addition, ADAT has in-house training programs to help develop technician skills.

"We haven't determined the exact number of technicians we will need," says Wolfe, who acknowledges that recruiting a sufficient number of qualified personnel to meet the growth will not be easy. "We see it as a problem because it's a problem throughout the industry," he continues. "The questions for us will be: Are there enough aircraft technicians in the world? And can we make it attractive for them to come here?"

Already a large MRO, Abu Dhabi Aircraft Technologies recently completed a paint hangar and single-bay hangar dedicated to line maintenance and plans are underway to build one of the world's largest open-span hangars.

Photo courtesy of ADAT

Pressure to staff up is eased somewhat by the fact that Etihad's fleet comprises new aircraft that will not need scheduled maintenance for several years.

Airport Expansion

Abu Dhabi Intl Airport, too, is expanding to accommodate the rapidly growing Etihad Airways. In September 2006 it signed a contract to have Terminal 3 constructed, largely for Etihad passenger service. The airport, serving more than 30 carriers, also reported at the Farnborough Air Show that it plans to complete its second runway - a parallel strip running 13,450 feet (4,100 meters) in length - by the end of 2008. The expansion is all part of the airport's $6.8- billion development master plan, as well as part of Abu Dhabi's ambitious goal of becoming an aerospace giant in the Middle East.

Middle East Growth Beyond Abu Dhabi

It's a good time to sell aircraft in the Middle East. Etihad Airways may have announced the largest aircraft order at last summer's Farnborough, but it wasn't the only carrier in the region to report hefty orders at the show. Indeed, it wasn't the only airline doing so from the United Arab Emirates. The new low-cost carrier FlyDubai announced an order for 50 Boeing Next Generation 737-800s valued at about $3.74 billion. Established by the Dubai government in March, FlyDubai plans to receive nine aircraft annually, beginning in May 2009, and launch operations in mid-2009. Emirates Air will initially provide the new carrier full maintenance support.

Meanwhile, leasing firm Dubai Aerospace Enterprise Capital confirmed a deal announced in 2007 with Airbus for 100 aircraft. The order for 70 A320s and 30 A350-900s are now on the manufacturer's backlog. Also at Farnborough, Qatar Airways signed a memorandum of understanding to purchase six Airbus A321s (two are options), example shown above. This is in addition to orders the Qatar-based airline has made for B787s and A350s, comprosing 140 aircraft total, including options.

[Copyright 2006 Access Intelligence, LLC. All rights reserved.]

Source Citation   (MLA 8th Edition)
"Abu Dhabi Cultivating the MRO Market." Aviation Maintenance, 15 Apr. 2009. General OneFile, http%3A%2F%2Flink.galegroup.com%2Fapps%2Fdoc%2FA198180796%2FITOF%3Fu%3Dsiast%26sid%3DITOF%26xid%3Dfdc49952. Accessed 13 Nov. 2018.

Gale Document Number: GALE|A198180796