Elbit Systems (Nasdaq: ESLTF) is currently competing in a major $778 million tender to supply unmanned aerial vehicles (UAVs) to the British Army.
Elbit Systems is bidding, despite the crisis in Anglo-Israeli defense relations, following Britain’s embargo on arms sales to Israel. The embargo prevents Israel from purchasing engines in Britain, which is liable to delay the overseas deliveries of Israeli defense industries.
Elbit Systems is competing in the tender through its Silver Arrow subsidiary, together with international firm Thales (EuroNext: 12132), which is participating through its Racal Electronics subsidiary in Britain.
The project is called Watchkeeper. The project is currently one of the largest UAV procurement tenders in the world. Britain plans to replace its outdated Phoenix UAVs with new models, which it will use for intelligence gathering, as well as target monitoring and acquisition for British ground and air units.
Britain wishes to supply the new UAVs with advanced sensors, and acquire ground control stations, command posts, data transmission systems, software, and land vehicles for operating all these UAV accessories. The timetable for the project stipulates supply of the UAVs by 2005, instead of in 2007, as originally planned.
In addition to the Elbit Systems-Thales partnership, there are three other bidders in the tender: Northrup-Gruman of the US, British Aerospace Systems, and Lockheed-Martin of the US.
Elbit Systems-Thales is offering two types of UAVs: the Hermes 180, designed for tactical missions, and the larger Hermes 450. The British government is likely to choose the tender winner in September.
Elbit Systems subsidiary El-Op Electro-Optics Industries is also competing in a separate tender to supply visibility systems and observation points for the new UAVs. El-Op, which is also competing against three other bidders, is offering electro-optic and infrared systems, which can be used in conjunction with the Elbit Systems-Silver Arrow UAVs.
Elbit Systems’ UAV sales amounted to $372 million in 2002, 45% of the company’s total sales, and are expected to grow to $399 million this year.
Published by Globes [online] - www.globes.co.il - on January 23, 2003