In a rare public statement Israel Aerospace Industries Ltd. (IAI) (TASE: ARSP.B1) chairman Harel Locker has been making pessimistic comments about the state of the government-owned company. He said, "There is politicization, regulation, allegations about corruption and $600 million lost by our commercial sector over a decade."
Locker was speaking at a conference organized by the Hurvitz Institute for Strategic Management at Tel Aviv University's Faculty of Management. He added, "IAI has strong markets but no strategy, and no growth and profit targets. With the Obama-Netanyahu agreement (the US military aid to Israel agreement, which insists all production must be in the US), the possibility of converting NIS 5 billion in future production was lost. The business reality is dynamic and with the thrust of a sword, you lose a market."
He added, "At IAI, there is no readiness for change. But I've picked up the ball and I'm leading change. I don't know why but the media takes a deep interest in us and has put its focus on us."
He continued, "We need to start making a profit, otherwise we'll end up with the liquidator. I saw that situation at IMI Systems and I don't wish that on anyone. At IAI, we'll cut our workforce, we'll cut expenses, we will streamline and begin to make a profit. If we don't make a profit and become a business, we won't exist."
Regarding a public offering for IAI that was approved over the past few days by Acting Defense Minister and Prime Minister Benjamin Netanyahu, he said, "We'll go for a public offering of our shares. I want returns on capital. I want transparency for IAI's activities and I want our shares to have a price so that everything is open and known. Only when these parameters are fulfilled will we be a business company like IAI ought to be. Raising equity will help us cope commercially and only a public offering will help the company move forward and prosper."
If it happens, we will have to approach our shareholders and ak for capital. I don't believe that the government will inject money into IAI. IAI must streamline and be focused on growth and profits as well as maintaining its tradition of technology and human capital - and then it will start to grow."
He added, "We will pursue a strategy of acquiring small companies."
Published by Globes, Israel business news - en.globes.co.il - on December 11, 2018
© Copyright of Globes Publisher Itonut (1983) Ltd. 2018