“We Believe that the B767 Tanker Provides the Best Value for the Customer”

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Israel Aerospace Industries’ Aviation Group has a unique distinction of having programs for both Boeing and Airbus models. It has demonstrated strong business performance in the last two years despite geopolitical challenges.

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In an exclusive interview with Editor – Raksha Anirveda, IAI’s Aviation Group Vice President and General Manager, Shmuel Kuzi (SK) discussed the group’s business activities, global expansion, and more. Here are the edited excerpts:

RA: How close is Israel Aerospace Industries (IAI) on its way to becoming the world’s number one conversion centre for commercial aircraft? Kindly elaborate highlighting the focus areas that IAI is looking forward to in the near future?
SK: IAI’s Aviation Group is already the world’s number one conversion provider. With 737-700, 737-800, 767-200 and 767-300 supplemental type certificates (STCs), we have more ongoing programs than any other company. Once the A330-300 program goes into serial production, we will be the only company with current programs for both Airbus and Boeing models. We have converted roughly twice as many 767s as the OEM, and we plan on doing at least the same in the A330-300 market. Finally, the 777-300ERSF, with an STC just around the corner, is a game-changer, with a 100-ton payload that far exceeds anything any competitor will be able to offer.

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RA. The world is witnessing a continuous increase in geopolitical upheaval. Has this affected IAI Aviation Group’s business overall?
SK: Our business remains strong, and on the same upward trajectory that it has demonstrated over the last two years. In fact, we have achieved a profit for the last eight straight quarters. Despite the difficulties in our region, the last two years (2022-2023) were significantly profitable. While 2024 has its own challenges, our backlog is strong enough to provide a buffer and shows the confidence our customers have in our ability to deliver.

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RA. The GCC region has good business prospects for commercial aircraft conversion business. To what extent has IAI been able to make inroads into this lucrative market so far? Can you identify some constraints that require immediate focus?
SK: IAI is active in the GCC (Gulf Cooperation Council) region, and the Aviation Group has strong relationships with the leading aviation companies in the UAE. We have an agreement to convert four B777-300ER aircraft for the Dubai-based Emirates, the world’s largest operator of B777-300ER aircraft. We plan to convert Emirates’ aircraft, and others, at Etihad Engineering’s MRO centre in Abu Dhabi, with the first induction scheduled for later in 2024. Other aircraft in the GCC region are also candidates for conversion, and we look forward to the geopolitical changes in the works that would make doing business elsewhere in the region truly a win-win situation.

RA. IAI has developed a unique specialty in converting different aircraft types, including the B707, B767, to military tankers and multi-mission transports. Conversions of the B767 represent the most comprehensive solution as a showcase. IAI, expanding its Indian footprint, has teamed up with HAL. Taking note of the Indian Air Force’s future procurement of aerial tankers, have you initiated work on creating a self-reliant IAI-HAL ecosystem including life cycle support and how is it progressing? What is your India business outlook in the next five years and how do you plan to play a pivotal role in the Make in India and Make for the World initiatives?

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SK: India is the third largest aviation market after the US and China, and projections for future growth are outstanding. No aerospace and defence company can ignore the Indian market. It is no secret that IAI has always had a strong relationship with the Indian Armed Forces. IAI has a signed MoU with HAL for the provision of B767 tankers to the Indian Air Force. We believe that the 767 provides the best value for the customer out of all the options. We expect that some, if not all, of the conversion work for the tankers will take place in India, to take advantage of the capabilities of the Indian defence industry and support the ‘Make in India’ initiative. We are in continuous contact with HAL to close the necessary details for a comprehensive and complicated program that will support Indian needs for the long term.

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RA. By mid-2024 IAI will start operating three conversion centres – in the US, Abu Dhabi, and South Korea, and plans to open two additional conversion facilities in other countries. Can you specify these countries and do they include India?

SK: We are currently focused on opening conversion centres in the US, Abu Dhabi, and South Korea, and our facility in Israel is fully committed for the foreseeable future. We are always exploring ways of adding capacity, and if demand for B777-300ER conversions remains strong we could open sites in other countries. Currently, we do not have plans in India to open a conversion centre that does not include HAL.

RA. IAI boasts of being ahead of the competition. As planned, has IAI Aviation group started the conversion of the Airbus-A330 along with the conversion of the Boeing 787? Can you also provide insights into your supply of systems and spares business for the aircraft of many airlines around the world? Have you been able to achieve your projected USD 45 million turnover target?

SK: Passenger-to-Freighter conversions demand long-term planning and the efficient use of our engineers requires that we conduct multiple staggered development programs. The 777-300 development program was launched in 2019 and is nearing completion. The A330-300 program was launched in late 2021 and the prototype aircraft is nearing induction. We are constantly looking forward to the next development program, and have therefore begun to address the feasibility of conversion of the 787.