More than a year after the Ministry of Defense approved Airpark's grounded aircraft storage park in the Negev near Ovda, the project looks set to move ahead quickly. Airpark's joint owners, Israel Aerospace Industries Ltd. (IAI) (TASE: ARSP.B1) and Haim Geyer's IES Holdings Ltd. (TASE:IES) have signed a memorandum of understanding to go ahead and set up the project.
The park will cover 650 acres and provide parking space for 500 commercial aircraft. IAI and IES will invest about $100 million in building and setting up the park.
State owned IAI will provide storage and security services, spare parts trading, and aircraft maintenance, and will also be responsible for obtaining the required permits and regulatory approval. There are similar such aircraft storage parks in Spain, the US and Australia.
Although the process of setting up the park began long before the coronavirus crisis began, the enterprise has now become much more relevant to the industry's needs. The park will be able to service airline's whose fleet is grounded or the aircraft of carriers that have collapsed and not been able to survive the crisis.
Airpark is adjacent to the IDF's Ovda air base, which also served as an airport for commercial passenger flights until Eilat's Ramon airport opened last year. The airpark could be operating within a few months once regulatory approvals are received. The park will employ about 800 people.
Even before the coronavirus crisis, there was a shortage worldwide of parking and storage space for grounded passenger aircraft as well as aircraft undergoing conversion between cargo and passenger uses. During the crisis there are about 7,500 aircraft parked in airports around the world including abandoned airports.
Airpark in the Negev will have storage capacity for 500 aircraft and the services provided will be under the license of the Bedek Institute in IAI's aircraft division. The project has been defined as a major engine of business growth in the civil aviation sector and will be of significant socio-economic importance for the Negev by providing hundreds of jobs for the south.
The Negev will also give Airpark a natural competitive advantage with the dry desert climate ideal for storing aircraft in the open air because it keeps corrosion from damp to the minimum. The abundance of cheap land also makes the venture a low investment proposition.
IES VP Yair Bitton said, "Due to the global coronavirus crisis, the two companies have identified an exceptional opportunity to put the State of Israel on the international aviation map and set up a strategic national project that will serve as a main engine of growth for many years."
IAI general manager aviation group Yosef Melamed said, "The difficult period that we are currently going through forces us to read the world's business map correctly and prepare for the day after the coronavirus crisis. The extensive knowhow and many years of experience that IAI has in the civil and military aviation field will serve as a base for important business operations in the world of aviation."
EIS has a market cap of NIS 830 million and owns the Palmachim Industrial Park near Rishon Lezion, which houses industry, logistics and the water desalination plant.
Airpark is one of a range of projects, which are expected to be declared as national projects as part of the government plans for renewed economic growth after the virus crisis ends.
Published by Globes, Israel business news - en.globes.co.il - on April 1, 2020
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