IAI to Build $1 Billion Aviation Group
2 January, 2018
The new Aviation Group will be comprised of the current BEDEK Aviation group, Commercial Aircraft group and the Engineering and Development group
Photo above: IAI’s new member in its Loitering Munitions (LM) family, the Maritime Harop.
Israel Aerospace Industries (IAI) reorganize the company to achieve better profitability. Last week The board approved a plan offered by the CEO and President, Joseph Weiss, to to consolidate all of IAI’s aviation businesses and establish a single Aviation Group . The new Aviation Group will be comprised of the current BEDEK Aviation group, Commercial Aircraft group and the Engineering and Development group.
It will focus on four business lines: aircraft development and manufacturing; development and production of aviation assemblies; aircraft conversion and enhancement; and aircraft maintenance. The new group is expected to generate approximately $1 billion sales. Yossi Melamed, Executive Vice President & General Manager of Bedek Aviation Group will head the new group.
Israel Aerospace Industries is a big aerospace and defense complex with $4 billion annual sales, but it is struggles with very low margins. IAI’s sales in Q3 2017 amounted to USD 840 million compared with USD 893 million in Q3 2016, a decrease of about 5.9%. Net income in Q3 2017 amounted to USD 10 million (1.2% of sales). The Operating income in Q3 2017 totaled USD 20 million, approximately 2.4% of sales. Its major competitor in Israel, Elbit Systems, enjoy Operating income of 10.3% of total sales.
Harel Locker, IAI’s chairman, said, that the transformation is implemented at a time in which many countries bring home their manufacturing operations and are fighting aggressively for market shares. The decision was taken following record-breaking contracts entered by IAI over the past year, including several huge deals, significantly increasing its order backlog. The CEO Joseph Weiss, said: “Recent years saw the global civilian aviation market growing consistently at 5%-7% a year. IAI needs to make the necessary adaptations of its operations to benefit from this growth.”