The first out of 33 F-35A Lightning II Adir aircraft Israel has ordered from Lockheed Martin will only land in Israel around mid-December, but Israeli defense companies have already been profiting from the largest arms deal in Israel's history. According to information provided by the Ministry of Defense yesterday (Sunday), since the deal for the new fighter has been signed in 2010, Lockheed Martin has ordered equipment totaling NIS 3.8 billion from Israeli companies, as part of reciprocal procurement.
Information disclosed by the Ministry of Defense Procurement and Production Directorate indicates that the first half of 2016 saw a sharp, 28%, increase in the volume of Lockheed Martin orders from Israeli companies compared with the second half of 2015, to a total of NIS 835 million.
The Procurement and Production Directorate explained that the surge in Lockheed Martin's procurement from Israeli companies is due to an increase in the order of systems and components integrated in the advanced fighter aircraft as early as the production stages. As a result, in 2016 Lockheed Martin has increased, by $190 million, orders for the advanced pilot helmet jointly developed and manufactured by Elbit Systems Ltd. (Nasdaq: ESLT; TASE: ESLT) and the US company Rockwell Collins Inc..
Moreover, another contract signed in the past between Lockheed Martin and Israel Aerospace Industries Ltd. (IAI) (TASE: ARSP.B1), for the production of the stealth warplane wings, was expanded by $26 million. As part of IAI's franchise to manufacture the wings for the advanced aircraft, the company launched an advanced production line in its complex near Ben Gurion Airport and has begun providing the first sets of wings to the US manufacturer a few months ago. "We are already looking ahead to the next reciprocal procurement deals," said Ministry of Defense Production and Procurement Directorate head Brigadier-General (res.) Shmuel Zucker, "we will act to substantially bolster such procurement in the near future."
Further Israeli companies involved in the F-35 project and producing subsystem and programs for the stealth fighter, are Cyclone Aviation Products, producing airframe components; Tadiran, producing communication, navigation and identification systems; Cabiran Company from Kibbutz Cabri, producing missile remote interface units and more.
17 more stealth aircraft
The Israeli Air Force and the IDF are interested in increasing the number of acquired stealth fighters during the current multi-year Gideon plan and conducting a further round of procurement of at least 17 stealth aircraft, resulting in two additional squadrons, 25 fighters each. They also hope to acquire a third squadron in the next few years, but this depends on receiving the necessary budget. The US Administration already provided tentative approval for such procurement.
Israel's first stealth aircraft procurement deal was signed in 2010, with $2.75 billion paid for 19 planes. In early 2015, a second procurement deal was signed, as part of which 14 further aircraft, spare parts and auxiliary systems, such as pilot training and instruction simulators were procured for $2.82 billion. In the past, Lockheed Martin has said that a potential deal for the procurement of a third stealth aircraft squadron may lead to a decrease of more than 50% in plane prices.
The US arms giant has promised that if Israel decides to acquire 75 stealth aircraft, it will carry out reciprocal procurement from Israel's defense industries for an astronomical sum of almost $5 billion.
The first stealth fighter squadron will be inaugurated at Nevatim Airbase in southern Israel, where preparations are being completed for the reception of the two advanced airplanes at the end of the year.
Published by Globes [online], Israel business news - www.globes-online.com - on August 15, 2016
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