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December 2015

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Mubdala increases cooperation with Etihad and GE Aviation bookmark

Etihad Airways Engineering and Mubadala, the Abu Dhabi-based investment and development company, have signed an MoU to explore areas of cooperation, with new contracts with a potential value of $1 billion over a 10-year period. One of these is the appointment of Mubadala-owned SR Technics as a preferred MRO supplier to Etihad. In addition, Mubadala and Etihad Airways are already in discussion with possible partners about the establishment of a narrowbody MRO facility in Eastern Europe.

 

Mubadala has also signed a Heads of Agreement with GE Aviation for the formation of a GEnx engine MRO facility. The transaction, building upon the maintenance partnership Mubadala and GE agreed to in 2013, includes the establishment of a regional MRO facility to be set up at the Nibras Al Ain Aerospace Park, and a direct investment by GE in this new venture. GE will also establish a dedicated GEnx parts logistics centre to service the joint venture, as well as regional GEnx operators. Mubadala will expand its GEnx partnership with GE Aviation through its dedicated engine MRO subsidiary, Turbine Services & Solutions (TS&S).

New engine shop for Dubai bookmark

HAA Engine MRO is a new tripartite alliance between India-based Haveus Aerotech, Air India Engineering Services Limited (AIESL) and AIitalia Maintenance Systems (AMS) to be based at the Al Maktoum International Airport in Dubai. The 9,000m² facility will be built by the airport within its Aviation District. Costing more than $100 million, the facility will cater to CFM56-5B/7B and CF6 engines, along with APUs and LM 2500 industrial gas turbines. It will be able to service around 100 engines per year.

 

Haveus Aerotech will be responsible for organising investments through internal accruals and external borrowing and through debt and equity partnership. The objective of the facility is to make Dubai South an engine hub, providing all services and creating opportunities for new engine development in the civil and defence sectors. It is also looking at introducing aviation studies at school level to help nurture fresh talent. AIESL will provide skilled manpower and quality certification related to the facility. AMS will extend tooling, technical and training assistance related to the facility setup.

Rolls-Royce shakes up Trent Service Network bookmark

Rolls-Royce has announced changes to three Approved Maintenance Centre (AMC) joint ventures, simplifying the structure of two and introducing a more competitive business model that will improve customer service. The company’s strategy is to develop a competitive, capable and flexible Trent Service Network to meet the changing needs of customers across the lifecycle of engines and to support the growing Trent engine fleet.

 

The changes relate to:

  • Hong Kong Aero Engine Services Limited (HAESL), a joint venture with Hong Kong Aircraft Engineering Company Limited and SIA Engineering Company
  • Singapore Aero Engine Services (SAESL), a joint venture with SIA Engineering Company and HAESL
  • N3 Engine Overhaul Services, a joint venture with Lufthansa Technik.

 

These will now operate under a new business model where the existing geographic territory-based arrangements used by Rolls-Royce to direct MRO work to each AMC will be replaced with a competitive model where each AMC will need to compete to secure their Trent TotalCare engine overhauls. Rolls-Royce believes that this competitive model will encourage greater capability and flexibility across the Trent Service Network. The AMCs are also able to compete globally for MRO services under time and material business terms.

 

These new agreements will also simplify the shareholding structure and management of HAESL and SAESL, with each becoming 50/50 joint ventures with two shareholders (from three today). To support this change, Rolls-Royce will increase its equity stake in HAESL and SAESL to 50% in return for an incremental investment of $206.5 million. For SAESL, Rolls-Royce will acquire HAESL’s current 20% shareholding in the business, taking its total shareholding to 50%, with SIAEC continuing to hold the other 50%. HAESL will distribute the $270 million cash consideration for its stake in SAESL to its shareholders, HAECO, Rolls-Royce and SIAEC. For HAESL, SIAEC will divest its entire 10% shareholding in the business for $116 million, with Rolls-Royce and HAECO each taking 5%, increasing their shareholdings to 50% each. The transactions are subject to certain closing conditions, including regulatory approvals. The shareholding arrangements with Lufthansa Technik for N3 remain unchanged at 50/50 ownership.

 

These changes complement the recent announcement that Delta TechOps will be joining the Trent Service Network as an independent AMC. Additional AMCs to further enhance the Trent Service Network will be announced at the appropriate time.

 

In addition to SAESL, Rolls-Royce and SIAEC have a second joint venture in Singapore: International Engine Component Overhaul (IECO). As part of these new agreements, and to further simplify the joint venture structures, Rolls-Royce and SIAEC intend to take the opportunity to amalgamate the business and operations of SAESL and IECO into a single entity.

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