Poland cancels Aeronautics UAV deal - report

Aeronautics has failed to meet the deadline for supplying its Aerostar medium range tactical UAV to the Polish Army for operations in Afghanistan.

The Polish media reports that Poland's Ministry of Defense is furious with unmanned aerial vehicles (UAV) manufacturer Aeronautics Ltd., which has failed to meet the deadline for supplying its Aerostar medium range tactical UAV. The Aerostar was slated for use by the Polish Army in Afghanistan to improve reconnaissance capabilities. The Aerostar is used by the US Army.

Some reports say that Poland's Ministry of Defense has cancelled the $35 million contract and that it is seeking compensation.

Aeronautics won the Polish Ministry of Defense tender in January 2010, beating both Israel Aerospace Industries Ltd. (IAI) (TASE: ARSP.B1), which offered its Heron UAV, and Elbit Systems Ltd. (Nasdaq: ESLT; TASE: ESLT), which offered its Hermes 450 UAV. IAI and Elbit Systems both quit the tender in the pricing stage, after concluding that they had little chance of winning it, because of Aeronautics' exceptionally low price.

"The company put on the table a floor bid that was very tempting and attractive for the Poles, and it won the pot. Its bid was 60% less than the bids of the other two companies," said a source familiar with the deal. He added, "The delay in deliveries and failure to meet commitments proves that it is not possible to deliver the goods at such low prices."

Aeronautics' contract was worth $30 million. It promised initial deliveries of the UAVs, the ground control systems, and training simulators by the end of 2010. It also promised to train crews for operating the UAVs in Afghanistan.

Israeli defense sources say that Aeronautics obtained a two-year postponement for deliveries from Poland's Ministry of Defense, but that the company still failed to meet its commitment to supply all the UAVs and their related equipment, even as the Polish Army had established special units for operating them.

Aeronautics refused to comment on the report.

Sources familiar with the deal told "Globes" that Aeronautics' executives have been trying to solve the crisis with Poland in recent weeks. The sources said that the company was surprised by the Polish media reports, and that Poland's Ministry of Defense may demand financial compensation from the company. "It is hard to ignore the fact that the Poles have been harmed. The UAVs were supposed to serve the Polish Army in operations, and we can assume that they are furious at Aeronautics," said a source.

The Aerostar is Aeronautics' flagship product. The 250-kilogram UAV can carry a range of payloads, including for intelligence missions. It has a 250-kilometer range and 12-hour endurance. Aeronautics previously sold at least 50 Orbiter UAVs to Poland.

Yavne-based Aeronautics made headlines a few months ago about tensions between its owners, and founder and CEO Avi Leumi denied in private conversations reports that the company was facing cash-flow problems.

Published by Globes [online], Israel business news - www.globes-online.com - on October 3, 2012

© Copyright of Globes Publisher Itonut (1983) Ltd. 2012

5 Comments
View comments in rows
Update by email about comments talkback
POST
Comments
Twitter Facebook Linkedin RSS Newsletters גלובס Israel Business Conference 2018