Abu Dhabi Aviation recently announced
H1 2011 financial results that showed profits up 150%, turnover up
20% and operating profit up 69%. What were the key drivers leading
to these increases? What is the outlook for the second half of the
year?
HAMMADI: The
results that were announced recently have been the result of a
strategy that was built over the last 3 years. Basically, it
started with Abu Dhabi Aviation being challenged in Abu Dhabi in
the oil sector. For the last 30 years, we had a monopoly over the
oil sector here. This created a secure business with sustainability
but at the same time it also created complacency throughout the
system. The only way to expand the business and grow the business
is to look for international opportunities. What we've tried to do
is to leverage what we've learned over the years in Abu Dhabi to
other areas and regions where our services are required. The
strategy was to diversify the business and to look for
opportunities elsewhere. We have a lot of assets which have been
accumulated over the years. I think what we are realizing now is
the efforts of putting all those assets to work. Hopefully we will
continue to show good results. We are in different contracts but we
do have a part of the business which is unpredictable; you gain a
contract here, you lose a contract there, work will finish in one
part of the world and be required in another area. So it's very
hard to predict what the future will look like. But looking at the
recent history, I think it's going to be positive.
How much of the companies activities
are still in oil services? What are the fastest growing business
units?
HAMMADI: Oil
services make up the core of the business. It's what we leverage to
do other parts of the business because of our experience, we have
logged over 1,000,000 hours in the helicopter side, the chopper
side. This is a great deal of hours when it comes to the helicopter
business. So we are leveraging all this experience to move forward.
But still, a big chunk of our business is in the oil sector; I
would say up to 50%. The demand for helicopters in general is still
strong worldwide. However, the type of helicopter in demand is
changing, moving from short and medium range to longer range
helicopters, which carry different capacities. If we take Brazil as
an example, the drilling has moved from onshore to deep water. In
order to be able to provide the logistics to those platforms, you
need a different type of helicopter. It's still within the
helicopter business but there are different requirements.
Abu Dhabi Aviation is active
throughout the region and as far as Brazil and Australia. How much
of the business is now coming from outside the UAE? How much of a
priority for the company is further international
expansion?
HAMMADI:
Around 40% of our business is coming from outside the UAE. We are
in different parts of the world, from Australia to Papua New
Guinea. It provides a good opportunity but also presents a lot of
challenges because of the logistics that come with it. This is the
part of the portfolio that we are trying to build in order to have
a mixed portfolio where we don't count on just one business or one
region. What we are trying to do is complement our core business,
helicopters, with fixed-wing operations and investment in different
sectors. For example, we are seeking a JV with AgustaWestland in
the region and we are working on a simulator center. All of this is
with the goal to end up with a mixed portfolio. As long as we can
secure investment, we will keep pursuing those opportunities inside
and outside the UAE. We have 30 years of experience in the oil
industry and we have logged over 1,000,000 hours flying
helicopters; all of this could be leveraged to do any kind of JVs,
investments and partnerships. So I think the opportunity is
there.
What have been the most significant
trends in cargo over the last two years? What advantages does Abu
Dhabi have for cargo operations?
HAMMADI: The
cargo business has shown tremendous growth, in the UAE and
worldwide. To my knowledge, growth exceeds 10%. As far as Abu Dhabi
Aviation is concerned, we own Maximus Air Cargo which is a cargo
operator. What they are trying to do is break into this market,
establish themselves as a reliable cargo operator and create
partnerships with the big airlines in the region. Hopefully, this
strategy will pay off in the long run. If you look at all the
traffic from the Far East towards the West, the Middle East is a
focal point in linking the East with the West and to provide a good
transition for aircraft. Creating a hub in Abu Dhabi which will
support the rest of the region is an opportunity that most of the
cargo operators will try to take advantage of. Having Abu Dhabi
airport, having Dubai, with all the major transition to different
parts of the world provides a good distribution for the cargo
network. I think Abu Dhabi will see great growth when it comes to
cargo operations and also on the passenger side.
How did the global economic downturn
affect aviation in Abu Dhabi?
HAMMADI: I
think everybody was affected; it is something that nobody was able
to escape. The approach that we have followed for the entities
which we are managing is to try to be as conservative as we could
be. As long as you are covering your liabilities, you are able to
sustain a downturn in the market. I think anybody who had built
those strategies and risk management into the overall strategies of
their companies has managed to escape. As far as we are concerned,
we operate on a contractual basis and most of our contracts are 2
years, so at Abu Dhabi Aviation we were okay. I have seen
difficulty within the executive jet market, the charter business.
They have suffered the most. But from what I have seen recently,
they've recovered. I would say 90% recovery has been achieved.
What are the long-term growth
prospects for aviation in Abu Dhabi?
HAMMADI: When
it comes to the aviation business, there is the long haul sector
which has been dominated by the big airlines, the national
carriers. I think this business will remain as a national carrier
business. It is a hard business to get into and it requires huge
investment. So within the current operators and industries, you
will see different growth among the airlines depending on each
airline's strategy. As far as corporate jets, corporate jets have
not limits. They are asked to fly anywhere in the world at any
time. Basically, it just depends on how good the economy is doing
around the world. This is the driving factor when it comes to what
they can achieve. When it comes to the rest of the industry,
smaller aircraft and helicopters for example, they are in separate
industries, which are driven by oil exploration or the different
requirements for search and rescue. A lot of people are paying
attention to the helicopter as a fast machine that can be used for
search and rescue and medical evacuation. We have experience with
this in Saudi Arabia, where we've had a contract for the last year
where we were helping the Red Crescent with such activities. I
think this is what will follow in the rest of the world, maybe not
in Europe, but at least the Far East and Middle East. So there are
growth opportunities in almost all the sectors but they are being
dominated by their own respective factors.
How well positioned is Abu Dhabi to
take advantage of the changing landscape in global
aviation?
HAMMADI: I
think it's very well positioned. When we look at what drives those
changes, it is technology. If we look 10 years back, the maximum
flight you could have was around 8-10 hours. Now with all the
modern aircraft this has been extended to 14, 15, even 17 hours.
The new technology will provide Abu Dhabi with an opportunity.
Flying from Japan or Malaysia or China, coming this way to connect
to Europe or the US puts Abu Dhabi in an excellent geographic
position. I think this success has been demonstrated by Dubai as
well, as far as the location is concerned. A lot of people have
seen it as a risk, having so many operators in the region, but it
has another commercial advantage. It provides the passenger with an
opportunity to get a connection to go anywhere in the world within
a few miles or a 30 minute flight. I cannot recall anywhere in the
world where you can get this advantage, even in Europe. So between
Dubai, Qatar and Abu Dhabi, there is this triangle of aviation
which will provide new opportunities for the whole world.
Abu Dhabi provides a secure environment for investments. Most of
the businesses in Abu Dhabi have an outreach to different countries
within the region and anyone who is interested in investing in Abu
Dhabi will have this opportunity, this is especially true when we
talk about business which requires moving people or cargo in and
out. One of the main advantages of Abu Dhabi is the great support
for the aviation business. There is a very supportive leadership
trying to work with and support investors, trying to put in place a
long term strategy for the next 30 years, and working hard to
establish the infrastructure required to achieve this growth.
Dealing with Abu Dhabi entities and clear and transparent and all
the government entities are being prepared and re-engineered in a
way to cater to all those additional investments that might come.
All of this will contribute to having a secure investment.
