Abu Dhabi’s Mubadala launched Sanad Aero Solutions launched in February 2010 as part of a plan to achieve more in the maintenance repair and overhaul sector than simply being a small niche player. The company’s mission is to take the hassle and inherent inefficiency of spare parts supply management off the shoulders of aircraft operators.
“A recurring theme [for the airlines] around 2008 and 2009 was the desire to have spares solutions,” explained CEO Troy Lambeth. “We did a study and found that the industry was holding more than $35 billion worth of spares inventory in engines and rotable components alone, and with some 12,000 more aircraft to be delivered over a 10-year period, this would add another $18 billion in inventory. We decided that we had to be able to bring some value to that situation.”
So Sanad works with its commercial MRO siblings–ADAT and SR Technics–to provide operators with spares under sale and leaseback arrangements. It now has more than $250 million under management and can bundle spares leases with long-term MRO contracts, such as those envisaged through Mubadala’s support alliance with Hamilton Sundstrand for the Boeing 787. The company is on track to do $1 billion worth of spare lease deals in its first five years.
By working with its own MRO network, explained Lambeth, Sanad can share the risks associated with managing the assets. Operators can opt for different contract structures that might, for instance, call for payment based on specific usage limits and materials costs. The company can provide spares provision for an entire fleet of aircraft with assured availability rates (varying from around 92 to 95 percent). The contracts typically run for five to 10 years and the parts generally are based with the operator or its MRO provider.
“The cost of the asset is only part of this,” said Lambeth. “Operators need to consider the full cost of ownership and the resulting operational and pricing concerns can put [airline] COOs at odds with their CFOs. That’s where we can help too.”