Future Unclear for DAE Capital as It Scraps Orders
Dubai Aerospace Enterprise has declined to confirm or deny reports that its leasing arm, DAE Capital, has cancelled all remaining airliner orders with Airbus. But the European airframer has acknowledged that the Middle East group is not currently a customer and its published orders tally does indeed confirm that orders for 34 A320s and 11 A350-900s are no longer on the books.
On July 14, Boeing reported that DAE has scrapped an order for thirty-five 737 narrowbodies, leaving it holding orders for 15 of the new 747-8 freighter and half a dozen 777s. Meanwhile, DAE is seeking to renegotiate the terms of an $800 million bank loan that falls due for payment on July 23. On June 29, the company confirmed that CEO Robert Genise had left the company.
“DAE enjoys an excellent working relationship with Airbus and Boeing and engages in a continuous dialogue with each about the company’s current and future needs. DAE does not comment on the specific nature of its discussions,” said DAE managing director Khalifa Al Daboos in a written statement. The company refused to answer more detailed questions and said that Al Daboos will not be available for further comment until at least the first week in August.
According to sources in Dubai’s financial community, speaking on condition of anonymity, five banks–Citigroup, Deutsche Bank, Emirates NBD, Lloyds and Noor Islamic Bank–are pressing government-backed DAE to make at least partial payment on the January 2009 loan. Based on list prices, the value of the cancelled Airbus orders is $5.8 billion.
Meanwhile, Dubai’s United Arab Emirates neighbor Abu Dhabi is making more tangible progress in its plans to break into the aerospace industry. Mubadala Aerospace, which like DAE is backed by a sovereign wealth fund, has shipped its first full consignment of composite aileron panels to Airbus for its A330/340 aircraft. The work was completed by Mubadala’s Strata subsidiary in Al Ain. Separately, Mubadala has agreed to a partnership with Hamilton Sundstrand under which it will be part of the support network for Hamilton Sundstrand products on Boeing 787 Dreamliner aircraft. These include the environmental control system and various power-generation and -distribution systems, as well as the fire-detection and -suppression system.