Israel Aircraft Industries, due to manufacture the future cargo plane for Federal Express, has decided to offer it to all major freight companies worldwide, including FedEx’s main competitor, UPS, as well as to DHL and TNT. IAI management sources told "Globes" that the reason for this is a shortage of orders for the new aircraft, and confirmed that IAI is already negotiating with these companies.
"The project cannot be implemented without orders of at least 100 planes in addition to the 100 which FedEx plans to purchase," the sources said. "FedEx has still not committed itself to purchase the aircraft, which is causing a delay in the summing up of negotiations to manufacture the plane outside Israel."
IAI’s civil aviation division deputy manager, Ami Davidson, confirmed that South Korea’s Hyundai concern is expected to sign a memorandum with IAI for the joint manufacture of the aircraft in Korea. According to Davidson, the market volume for the new aircraft is 500-800 planes. "Most orders are expected to come from the US and Europe," he said. "But we still don’t have any commitment from any client."
Following the receipt of the orders for the first 100 planes, a passenger version of the aircraft may be manufactured. IAI must comply with a strict condition stipulated by FedEx, according to which the cost of one plane will be no more than $10 million. Manufacture of the aircraft in Israel is not possible because of the lack of infrastructure and the high labor costs.
Published by Israel's Business Arena June 14, 1998.