Aabar adds executive jets to its portfolio

Investment arm of Government places $20m in jet charter company XOJET to "provide first-class private aviation services to various destinations within the MENA region".

Aabar Investments, which has stakes in a Formula One racing team, electric sports cars and space tourism, added executive jets to its portfolio yesterday with a US$20 million (Dh73.4m) investment in XOJET. The jet charter company, based in California, and Aabar, an investment arm of the Government, will form a joint venture in the UAE to "provide first-class private aviation services to various destinations within the MENA region", Aabar said in a statement on its website yesterday.

A spokesman for Aabar said it hoped to announce another aviation purchase within two weeks. The latest investment will add another high-profile name to Aabar's diverse list of investments, which include Tesla, the Brawn GP F1 racing team, Daimler and Virgin Galactic. Aabar began as a small energy firm and began making major purchases soon after the International Petroleum Investment Company of Abu Dhabi bought a 70 per cent stake in mid-2008.

"Right now they are all over the place," said Deepak Tolani, the vice president of equity research at Al Mal Capital in Dubai. But Mr Tolani suggested that the company was developing a strategy around the property sector with its 71 per cent acquisition of Arabtec Construction, the Dubai-based building giant, in a deal worth Dh6.4 billion last month. As of last September, Aabar owned 19 towers and 21 plots of undeveloped land on Reem Island and elsewhere in Abu Dhabi, he said.

XOJET has long been courting Abu Dhabi as a source of financing. Previous investments from the emirate in the company include a $470m financing round backed by TPG, a US private equity firm, and OCL, referred to as an Abu Dhabi-based investment fund that had previously invested in the executive jet operator. A year earlier, XOJET officials said they were in the process of lining up a $400m investment from Tasameem, a property developer controlled by Sheikh Mansour bin Zayed, the Minister of Presidential Affairs.

XOJET flies the Cessna Citation and Bombardier Challenger 300 jets and had long been expected to open its first base in the Middle East out of Al Bateen Executive Airport, the recently redeveloped military airbase on Abu Dhabi Island. Should XOJET follow through with the plans for Al Bateen, it will join a growing field of operators at a time when demand for executive jet travel is down significantly from its peak two years ago, due to the global downturn.

Falcon Aviation, Prestige Jet and Al Jaber Aviation fly out of Al Bateen, while Royal Jet and Presidential Flight Authority, the latter of which is reserved for the ruling family and high-ranking government officials, are based at Abu Dhabi International Airport. The global slump in demand for executive jet travel has sent other operators relocating their aircraft to the Middle East, flooding the market and in some cases forcing operators to charter out aircraft at below cost.