Israel Aerospace Industries (IAI) and Elbit Systems are launching a joint venture aimed at acquiring, operating and maintaining advanced training aircraft for the israel Air Force. The JV will operate under “Joint Entity” established under an agreement signed by the two companies today. The two companies will own equal shares in the new company. Certain portions of the Project’s work scope will be acquired from IAI and Elbit Systems, respectively, in accordance with a work sharing plan determined by the two sides.
The Israel MoD is currently reviewing contractual possibilities with regards to the Project, based on a request for information (RFI). The two companies are planning to submit a response to this RFI in the coming days, through the Joint Entity. Given the substantial value of the aircraft procurement and MOD commitment for through life cycle cost reimbursment, the value of the projected contract is expected to be substantial to both companies. The scope and long term commitment of the companies and customer could justify financing part of the program by raising capital by in a public offering.
In the framework of a contract for the Project, it is expected that the Joint Entity will seek sources of financing for the establishment of infrastructure, procurement of aircraft, spares, and support equipment, simulators and other taining aids. The IAF has evaluated several options and is currently considering either the South Korean T-50, proposed jointly by Korean Aerospace Industries (KAI) and Lockheed Martin or the Italian M-346 from Alenia Aermacchi, (derivative of the Russian Yak-130). Both aircraft are offered with advanced virtual avionics suite, enabling the trainers to depict the cockpit layout and functionality of state of the art fighters such as the F-16I Block 50/52 (Sufa), F-15I and future F-35.
According to the Agreement, the scope of the Project will be divided to the extent possible equally between Elbit Systems and IAI, and if required, balancing arrangements will be established between the two companies.
Leasing basic, intermediate and advanced trainers to air forces has become a big business for major system integrators, with primes such as Boeing, Lockheed Martin, BAE Systems embarking on such ventures in the U.S., U.K., Canada and Singapore. The Israel Air Force has contracted Elbit Systems and IAI private financeing initiatives for the operation of basic trainers, simulator farms, and maintenance of lead-in trainers. The expected contract for the advanced trainer expected to add significant volume to such initiatives.
IAI and Elbit Systems have already established several JVs for the joint development and marketing of unmanned ground vehicles (G-NIUS). Other joint operations has not been successful, due to firece competition between the two companies.
Photo: Nehemia Gershuni.