The Israel Air Force has taken another step toward bringing into service its new jet trainers: Knafaim Holdings Ltd. (TASE: KNFM), controlled by the Borovich family, announced on Sunday that it had been hired as a subcontractor by Israel Aerospace Industries Ltd. (IAI) (TASE: ARSP.B1) for the regular maintenance of the planes for 20 years, under a NIS 600 million contract.
The Air Force is procuring M-346 jet trainers from Italy's Alenia Aermacchi SpA for NIS 4 billion. In exchange, the Italian government has promised to make reciprocal procurements for a similar amount, including a satellite and two reconnaissance and surveillance planes made by IAI.
30 M-346 trainers will replace the Air Force's A-4 Skyhawks for training pilot cadets for combat. The Air Force will name the M-346 the Lavie ("Lioness" in Hebrew), the name given to the combat jet that Israel developed in the 1980s, before discontinuing the program.
As part of the procurement of the M-346, IAI and Elbit Systems Ltd. (Nasdaq: ESLT; TASE: ESLT) established a joint venture, Tor Advanced Flight Training, which will operate the planes for the Air Force Flight School. Under the collaboration, IAI will be responsible for the planes' regular maintenance, and Elbit Systems will be responsible for the avionics. Knafaim will manage a substantial part of the planes' maintenance as a subcontractor for IAI.
Knafaim Holdings subsidiary Knafaim Maintenance Ltd. signed a similar contract with IAI in 2005 for the maintenance of the Air Force's Skyhawk trainers. Knafaim also maintains other Air Force planes. The company has 230 employees, and plans to expand its workforce by 10-15% ahead of the commissioning of the M-346 trainers, and to train its employees in the planes' maintenance.
"Over the next 2-3 years, the new planes will gradually replace the obsolete Skyhawks. This is a major challenge for us: we will be responsible for the new planes while continuing the maintenance of the old planes. For this purpose, we have to expand our workforce," Knafaim Holdings chairman Shlomo Hanel told "Globes".
Published by Globes [online], Israel business news - www.globes-online.com - on July 29, 2013
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