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Level

Flight

ISRAEL AEROSPACE
INDUSTRIES NEEDS TO TAKE
SOME HARD DECISIONS

Arie Egozi

Can a state-owned company compete in the US180 million compared with approximately US$182 million in 2017.
civil aviation market? is the main question the In 2018, IAI had a backlog of US$13.5 billion. Sales amounted to
new management of Israel aerospace indus- US$3.7 billion, an increase of five percent as compared with 2017.
tries (IAI) is trying to answer and fast. The Net loss in 2018 was US$44 million. In 2018, IAI’s export sales
question has been in the air for some time, but accounted for 74 percent of the total sales. Sales for the defence
after the release of the 2018 financial results, market accounted for 72 percent of the total sales.
the answer became critical, very critical. There
is no doubt, inside the company and outside According to Nimrod Sheffer, IAI’s CEO, the loss in the year arises
it, that IAI will have to immediately complete from several non-recurring events, including the provision for the
and implement its new strategy to start earning early retirement of employees, write-off of inventory due to the
from its diversified operation. prolongation of a pre-sale process of a material contract and the
impairment of an intangible asset in the refueling conversion opera-
Downward Spiral tion. Sources said that these reasons are very marginal and without
This is the reaction of Israeli sources to the a speedy implementation of a restructuring plan, the situation will
largest Israeli defence company loss of US$ 44 not change.
million in 2018. One of the sources said that the
1200 redundant employees are one of the prob- Consolidation
lems but not the major one. “IAI has defence They pointed to problems in the civil operation of the company. All
and civil activities. For personal reasons, the civil operations were recently consolidated into a single group
these operations have not been adapted to “The move was positive, but the implementation is too slow” one of
the changing world market. This must happen them said. According to the IAI’s CEO, there is no doubt that IAI still
tomorrow. If not, this company will continue to faces numerous and major challenges in the years to come, both
lose and that may badly effect its ability to keep within and without.” We have a duty to our employees, customers
the needed R&D levels,” he said. and partners to exercise all efforts to secure the Company’s finan-
R&D expenses in 2018 totaled approximately cial stability, growth and profitability.” The fact that IAI is still in the

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