Thursday, October 17, 2019
Home > Business & Finance > Aviation consolidation a must, Mubadala executive says

Aviation consolidation a must, Mubadala executive says

Abu Dhabi: The global aerospace and aviation industry is too fragmented and must consolidate to ensure both growth and competition, Mubadala’s top aerospace executive warned.

“A lot of new players are attempting to penetrate the segment, be it space, defence, aerospace and aviation, and we can’t continue with that model,” said Humaid Al Shemmari, Mubadala Aerospace and Engineering chief executive.

Speaking at the Global Aerospace Summit in Abu Dhabi on Monday, Al Shemmari warned that the market is too small for new players to keep entering without offering any key differentiating factors that separate them from competitors.

Al Shemmari overseas the aerospace division at Mubadala Development Company, including Strata Manufacturing, which supplies parts to Airbus and Boeing.

He said that Mubadala, a relatively new player in the aerospace industry, distinguishes itself from other fresh-faced competitors through joint ventures and other partnerships.

Last year it signed a combined $5 billion (Dh18.37 billion) in contracts to supply parts to Airbus and Boeing. He said that through this deal, the two plane manufacturers are able to guide Mubadala into becoming a premium, modern supplier.

Al Shemmari also pointed to Ammroc, a joint venture between Mubadala, Sirosky and Lockheed Martin, who he said are filling a gap in the region’s military market.

“We go in with our partners, not on our own and not a Greenfield, to go in a fill that gap,” he said.

Resistance in the top tier

Companies in the United States are moving forward in consolidation but only on a limited scale, said Marion Blakey, president and CEO of Aerospace Industries Association (AIA).

AIA is an American trade association that represents the interest of civil and military suppliers and manufacturers.

“We’re talking about [consolidation] at the third and fourth tier but at the top tier there is a very real reluctance in the US to have any of our companies to consolidate,” she said.