Israel Aerospace Industries (IAI, Chalet A29) has a strong association with the defense sector, with many of its most high-profile programs being in the military domain. However, as the group deals with the impact of reduced defense spending it is looking to boost the civil side of its business and is encouraged by recent growth in demand for the passenger-to-freighter airliner conversions offered by its Bedek subsidiary and also for aircraft maintenance work. The civil market still accounts for just 25 percent of IAI’s balance sheet, but this is rising.
Under the leadership of corporate executive vice-president Gadi Cohen, the group is in the process of restructuring its commercial aviation division, while also trying to reduce costs. The final plan has yet to be determined, but IAI’s goal is to expand its commercial revenues around five core areas: the manufacturing work it does for Gulfstream’s G150 and G280 business jets; aerostructures; airliner conversions; maintenance repair and overhaul (MRO); and possible, but as-yet undefined, new aircraft activity.
“We intend to reshape our activities and focus on our centers of excellence,” Cohen told AIN. “We may abandon some parts manufacturing where this work can be done more economically by other parts of our supply chain.” IAI expects the restructuring process, which is part of a group-wide effort to improve profitability and eliminate duplicated effort, to be completed in the next 8 to 12 months.
Bedek Conversions
Over the past 40 years, Bedek has converted more than 200 legacy Boeing 737s, 767s and 747s into freighters. Its engineering team is now working on a conversion package for the newer 737NG model, with a new supplemental type certificate for the 737-700 version about to be issued, followed by one for the larger -800 in 2017. The 737NG will soon be replaced as a current production model by Boeing’s new 737 Max product, which has achieved strong sales among passenger carriers.
IAI’s maintenance, repair and overhaul subsidiary has capability covering classic Boeing and McDonnell Douglas airliners, as well as the Airbus A320 and A340 series, the Lockheed L-100 and C-130, as well as the Gulfstream G100/150/200 series business jets, the Bombardier Challenger 600 family and the legacy Hawker 800 series. It also has extensive engine maintenance and component repair capability, as well as a team that provides civil helicopter upgrades.
As part of its ongoing effort to strengthen its presence in Asia, IAI has formed an MRO joint venture with Lingyun (Yichang) Science and Technology Group in China’s Hubei province. The new operation will focus on supporting the company’s growing number of Boeing narrowbody airliners.
Generally speaking, the business jet sector continues to be discouraging for IAI, but Cohen insisted that this may be no more than a temporary trend that is impacting all manufacturers. “We still expect to see the continuation of a slower recovery and we will maintain production rates [for the G280 and G150] at around two aircraft per month,” he said.
In the aerostructures field, IAI makes composite floor beams, bulkheads and sections of the horizontal stabilizer for Boeing’s latest 787 widebody, as well as empennage leading edges for the 777. “We want to increase our work with Boeing, but we are also now in discussion with Airbus to get some new opportunities there from the requirement to have double-sourcing due to the high rate of production [for the A320neo] and also on the new A350-1000,” said Cohen, indicating that IAI is also in talks with Bombardier about possible work on its airliners.
IAI, especially through its Ramta operation in southern Israel, has growing expertise in composites manufacturing and nacelle production. “We add the most value where the packages are the most sophisticated, and where can provide a center of excellence for the customer,” Cohen concluded. “We are developing new production technology and we can tailor these packages to individual customers.”