Published On: Wed, Jul 2nd, 2014

Israel Aerospace Industries in $1.38 Billion Korea Bid against Boeing, Airbus


The tender is for the sale of 4 refueling aircraft for the South Korean air force.

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Israel Aerospace Industries Ltd. (IAI) (TASE: ARSP.B1) yesterday filed an official bid in the giant tender for the sale of four refueling aircraft for the South Korean air force. The price bid was submitted to the South Korean Ministry of Defense by company representatives currently visiting the South Korean capital of Seoul.

The tender is worth an estimated $1.4 billion. Two aerospace giants, Boeing and Airbus, are competing against IAI. Defense industry sources said this week that the South Korean Defense Ministry would decide by the end of the year which of the three companies would supply the refueling planes.

Even though IAI is up against two major aerospace companies, the company is convinced that it submitted a more attractive and significantly cheaper bid than those of Boeing and Airbus. Boeing is offering KC46 refueling aircraft, while Airbus is offering the A330 MRTT. The bids by Boeing and Airbus involve new air tankers, which aerospace sources believe will make them significantly more expensive than the IAI bid.

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IAI is offering South Korea airborne refueling tankers based on an old Boeing 767 platform, used in the past as a passenger aircraft. The planes will be comprehensively upgraded and adapted for missions of air refueling and transportation of supplies and military forces. If IAI wins the tender, it will acquire the used aircraft by itself, and the adaptation work will be done by the Bedek Aviation Group at the company facilities near Ben Gurion Airport. IAI is guaranteeing that the upgraded planes can be operated for 30 years, thanks among other things to its innovative avionic systems. The company has already supplied refueling aircraft to the Brazilian and Colombian air forces.

The South Korean tender is causing great tension at IAI. Beyond the opportunity it offers the company to establish its presence in South Korea at a time when competition in the usual markets is intensifying, IAI is eager for projects that will improve the Bedek Group’s performance. The Group posted a $15 million operating loss in the first three months of the year, compared with a $4 million operating loss in the corresponding period last year. The company attributes these figures to a steep decline in the Group’s business caused by lower demand for aircraft conversion and maintenance.

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Published by Globes [online], Israel business news – www.globes-online.com 

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