Mubadala quits engine servicing talks with Rolls-Royce

Mubadala has called off a joint venture with Rolls-Royce to form an equal partnership to service aircraft engines.

Mubadala, the strategic investment arm of the Abu Dhabi Government, has called off a joint venture with Rolls-Royce after more than a year of discussions about forming an equal partnership to service aircraft engines. Initial plans called for the two parties to invest jointly in a new Abu Dhabi company to service and repair Rolls-Royce's Trent family of aircraft engines and capture business from Middle East airlines, which are among the largest buyers of Trent power plants.

Mubadala has said it will seek to have its existing maintenance business in the region, Abu Dhabi Aircraft Technologies (ADAT), licensed by Rolls-Royce to do the work itself. "We stopped the [joint venture] discussions," said Homaid al Shemmari, the executive director of Mubadala Aerospace. The company will still have dealings with Rolls-Royce. "What we came up with ? is a model of working in partnership with [Rolls-Royce] where they certify our engine shop."

Mr al Shemmari said the new structure with Rolls-Royce was similar to its partnership with GE, the world's largest aero engine company. The GE partnership was formed last summer. Under that deal, Mubadala will licence repair work from GE and create a facility in Abu Dhabi, opening in 2013, to repair the GE90 and GEnx engines, which are used on several Boeing models. "With GE structured the way it was, we figured we could revise the discussions with Rolls-Royce into transfer-of-technology and licensing agreements," Mr al Shemmari said.

A Rolls-Royce spokesman declined to comment on the end of the joint-venture talks, saying only that the company had "a number of mutually beneficial opportunities in Abu Dhabi under development". "We look forward to continuing a positive and productive relationship with Mubadala," he added. Joint ventures are a key tool for Mubadala, which is investing heavily to develop an aerospace centre in the UAE capital encompassing aircraft maintenance, manufacturing, training and research and development. It is nearing the end of other joint-venture discussions for a military aircraft maintenance company with Sikorsky Aerospace Services.

The first Trent engine repairs could take place at ADAT, based at Abu Dhabi airport, by the end of this year, Mr al Shemmari said. Demand for engine work is expected to be the fastest-growing segment of the aviation maintenance, repair and overhaul market over the next 10 years, growing at 4 per cent a year, according to the UK-based AeroStrategy, an aviation consultancy. Overall, forecasts for aircraft maintenance in the Middle East see the market doubling to almost US$5 billion (Dh18.36bn) by 2020.

The expected growth has propelled Mubadala to create a finance arm, Sanad Aero Solutions, to help airlines purchase and manage engines and other components.