Mubadala Development Company (Mubadala), a strategic investment and development vehicle established and wholly-owned by the Government of the emirate of Abu Dhabi, today signed a Memorandum of Understanding (MOU) with US industrial major Lockheed Martin [NYSE: LMT] that will see the two organizations collaborate on various aerospace activities and projects in Abu Dhabi and across the MENA region. The MOU was signed at the Paris Air Show by Waleed Al Mokarrab Al Muhairi, COO of Mubadala, and Ralph D Heath, Executive Vice President – Aeronautics, Lockheed Martin Corporation.

It is the second agreement signed by Mubadala with blue chip strategic partners at Le Bourget this week as the company moves to firmly establish Abu Dhabi in the international aerospace arena. “This MOU signifies our mutual interest to explore ways in which we may both collaborate and address sustainment, maintenance, repair and overhaul, engineering and technical support of military aircraft,” said Al Muhairi.

“We see an opportunity in creating sustainment programs across several platforms, such as the F16 Block 60 Desert Falcon, C-130 Hercules, Mirage 2000, Hawk and PC7. “Jointly we would like to develop and align our activities to attract other strategic partners to provide best value full-service, end-to-end, military aircraft support. “ Together, Mubadala and Lockheed Martin have identified various military aircraft airframes and engines as part of the scope of a joint MRO business agreement.

“These structures include, but are not limited to, tactical fighters, cargo and / or transport aircraft,” explained Heath. “The agreement is open to working in partnership with other UAE entities and global aerospace organizations. It is a highly strategic move to position ourselves with our affiliates in the region.” LM Aero is one of the world’s leading companies in the design, development, production and support of advanced military aircraft and related technologies and is the original equipment manufacturer of the F-16 ‘Fighting Falcon,’ in service with the UAE Air Force, the C-130 ‘Hercules’ transport carrier, F-22 Raptor fighter and the F-35 stealth tactical aircraft.

In the agreement, Lockheed Martin will also investigate participating with Mubadala in its other aerospace development activity with particular attention to Research and Development activity. “This agreement further underscores Mubadala’s desire to select partners of global standing to achieve the economic diversification mandate of the Abu Dhabi Government,” said Al Muhairi. Mubadala already holds significant aerospace assets with a 100% holding in Horizon Flight Training School, a 35% holding in Piaggio Aero Industries, a 40% stake in Swiss aircraft and engine services provider SR Technics and 100% ownership GAMCO, an Abu Dhabi-based MRO.

Mubadala’s entry into aerospace investment marks a major change of emphasis. Until now, the region has been a very large purchaser of aircraft, but has not played a significant role in aerospace investment. Now, in a sign of the Gulf states’ growing self-confidence, Abu Dhabi – which already has a track record of aviation assets - plans to be a very active producer and investor in the industry. Mubadala’s entry into aerospace will be organised in carefully planned stages and is likely to involve significant investment in the first few years.

Its strategy is to negotiate investment and technology-sharing partnerships with leading international businesses. The objective is to diversify away from heavy reliance on oil and energy and to develop the sustainability of a broad-based economy for the fast-growing United Arab Emirates. Human resource development will be a key focus in Mubadala’s aerospace initiatives. UAE technician and design engineering capability will be enhanced through an aerostructures joint venture, while a proposed Research & Development facility will provide an outlet for academics and chemical engineers in the UAE to exercise their capabilities for advanced material applications.