Mubadala Aerospace: Companies need to compromise, work together for sustainability

Sanad expands $900mln partnership with Etihad while Strata reports 50% drop in revenues due to COVID-19

  
Image used for illustrative purpose. Composite image of worker in maintenance factory with digital tablet.

Image used for illustrative purpose. Composite image of worker in maintenance factory with digital tablet.

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Companies must find ways to compromise, as competing with each other during a force majeure will impact industry sustainability, said Badr Al-Olama, Mubadala Aerospace’s executive director.

Al-Olama, who is also chairman of aircraft parts supplier Strata, said that competitors in aerospace had not gotten together to discuss ways to make supply chains resilient.

Speaking at the Global Aerospace Summit, he said that COVID-19 had been ‘very devastating’ and that a fair compromise to ensure the sector’s future sustainability was lacking.

Mubadala revealed during the summit that another of its subsidiaries, Sanad, had expanded its existing $900 million partnership with Etihad Airways, to include a spare engine deal, which the companies said further cemented Abu Dhabi’s position as a self-sustaining international aviation sector hub. 

“When you look at our portfolio today, we actually make aircraft parts, we fix aircraft engines, we also lease spare engines and components to airlines.

“All three businesses of ours have been impacted, impacted severely. This is not a blip or a hiccup, this is something that has been very devastating. I can assume this is not just us, but across the entire ecosystem.”

More than 50 percent of Strata’s revenues had disappeared, said Al-Olama, and Mubadala’s maintenance repair and overhaul (MRO) business, Sanad Aerotech, which has long-term contracts with GE and Rolls Royce, faced challenges as some airlines are at business sustainability risk.

“The difficulty we have is that we live in capital markets that are rewarding you for being better than your competitor,” he said. 

“But the reality of being better than your competitor in a situation of difficulty, a force majeure, a pandemic that has completely stopped airlines from moving, or travelling, or anything, this requires us all to sit down and have an honest discussion.

“We cannot all profit at each other’s expense, there has to be a compromise. The compromise has to be fair for the future sustainability of the sector.”

Companies needed to discuss ways to make the supply chain not just resilient, but flexible, he said.

“Where it really matters today is to have the airports, the airlines, the original equipment manufacturers (OEMs) the suppliers, the MRO service providers, the ground handlers, sit down together.

“We all need to work together, and that is a fact that you will see in a lot of other sectors. The supply chain actually works very well with each other to make sure the end product does not get disrupted for the customer.”

(Reporting by Imogen Lillywhite; editing by Seban Scaria)

(imogen.lillywhite@refinitiv.com)

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