What's generating the most buzz at the Dubai air show this week? It isn't the new Airbus A-380, the world's largest passenger jet or the U.S. Air Force's F-117A Nighthawk stealth bomber, always a crowd favorite. It's Dubai itself, which, as the home of an ambitious new aerospace firm, is solidifying its position as a world center of the aviation industry.
After quietly assembling an experienced management team and securing key initial acquisitions, Dubai Aerospace Enterprise (DAE) is shaping up to be a formidable player in the airplane business. "From zero, we are off and running in less than a year," says CEO Bob Johnson.
DAE will leave the flying to Emirates Airlines, which two decades ago spearheaded Dubai's drive to become an international business hub and earned itself a golden reputation along the way. Instead, DAE is focusing on almost everything else that keeps passengers aloft: plane maintenance, leasing, airport development, aircraft-parts manufacturing, pilot training and technology-based innovations in areas such as airport security and communications.
Johnson, a 60-year-old American who made his name as CEO of Honeywell Aerospace, contends that DAE is perfectly poised to leverage a $15 billion investment budget, Dubai's business savvy and its excellent geographical location to capitalize on the leaping global demand for aviation services, particularly in fast-growing markets such as China, India and Russia. Subsidiary DAE Engineering got off to a swift start last year when it bought into SR Technics, a Swiss-based leader in the maintenance, repair and overhaul business. Then, last August, it acquired North America–based Standard Aero and Landmark Aviation, giving DAE a solid foundation for its global maintenance network.
DAE Capital has plans to spend $1.75 billion by the end of the year to jump-start DAE's leasing business with a portfolio of 33 airplanes, which it will loan to top commercial airlines. Hoping to benefit from the trend of carriers preferring to lease rather than purchase aircraft, it intends to boast an inventory of as many as 125 mostly wide-bodied Airbus and Boeing planes, valued at a total of $5 billion, within four years.
DAE has already hit some setbacks, however: in September, Johnson had to pull out of a bid to acquire Auckland International Airport Ltd. in New Zealand, a deal he hoped would get DAE Airports quickly up and operating. Though the airport's board approved the deal, it faced political opposition to a foreign takeover. "You can't fall in love with the deal if it doesn't sing and dance," he says. "You want to win every one, but you can't."
Yet Johnson has reason to be optimistic. For starters, DAE Airports may help develop Dubai World Central, billed as the world's largest and most technologically advanced airport, due to open by 2012. Johnson also sees a huge opportunity in developing airports in countries with growing economies, where for the first time, millions of potential passengers are acquiring the means to travel by air. DAE is working on bids for the construction or overhaul of 10 airports, mainly in India and the Middle East. Currently operating out of cramped offices in the Dubai International Financial Centre, DAE will move to Dubai World Central, slated to be the size of London's Heathrow and Chicago's O'Hare combined. Johnson estimates that DAE's global workforce will grow from its present 4,000 to more than 30,000.
Like much of what happens in this booming emirate, DAE owes its creation to Dubai's ruler, Sheik Mohammed bin Rashid al-Maktoum. In addition to the Dubai government, DAE's seven shareholders include the biggest names in Dubai business, such as Emaar Properties, Istithmar and Dubai International Capital, which are all wholly or partly government-owned. More important than money, perhaps, is Sheik Mohammed's towering ambition, which Johnson compares to that of Jack Welch, for whom he once worked at General Electric. At GE, it "was all about being No. 1," Johnson recalls. "That's what's going on here [too]. It's all about how many things you can do at the same time and be No. 1 in all of them."
Johnson has no doubt that DAE can achieve that kind of success: "The market needs it. The demand is calling for us to go even faster." Besides, "My shareholders don't fail. It's not in our blood." Still, he admits to one failure in his own recent past: an attempt to retire. After wrapping up his career at Honeywell in 2006, he planned to spend some time walking the fairways at Scottsdale's Grayhawk Golf Club. But once the folks from Dubai tracked him down with an offer to create one of the world's biggest aerospace companies, he knew his career was taking off.