Under a cooperation agreement with Boeing, Israel Aerospace Industries Ltd. (IAI) (TASE: ARSP.B1) will manufacture tail frames for the future Boeing 777X airplane. IAI estimated the potential of cooperation with Boeing on the future plane and of manufacturing the frames, which has already begun, in the hundreds of millions of dollars in the coming years. In the case of the Boeing 777X, IAI's civilian division will produce both the horizontal and vertical parts of the tail frame.
At the same time, IAI will continue to manufacture frames for the current Boeing 777 models for the entire lifespan of the program. IAI currently produces frames for 10 777 planes a month, while also making frames for the Boeing 787 Dreamliner.
"Working with the international aviation giant is significant recognition of IAI's technological capabilities," company management said, following the agreement with Boeing. "Boeing's vote of confidence in us is also very significant for us."
Cooperation between Boeing and IAI began 40 years ago, and IAI is considered one of the US company's strategic suppliers. Company sources said that IAI's current manufacturing infrastructure was also suitable for Boeing's future airliner venture, so that it does not appear that any substantial investment in adapting IAI's production lines to the new plane will be necessary.
It is still unclear how the agreement to extend cooperation with Boeing will affect IAI's civilian business. Since 2009, the company's civil aviation division, which converts civilian airplanes and makes executive jets, has accumulated losses totaling $230 million. Following its accumulated losses and deteriorating financial situation, IAI is negotiating with the workers' organization in the company in an attempt to reach agreements on a comprehensive recovery plan.
IAI management is seeking understandings involving voluntary retirement for 1,000 workers, mostly from the civilian divisions, which have been responsible for most of the company's burdensome losses.
Published by Globes [online], Israel business news - www.globes-online.com - on February 23, 2016
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