Israel Aerospace mulls financial recovery plan

IAI Elta

IAI's recovery plan includes voluntary retirement by 1,200 employees but no reduction in the number of VPs.

Israel Aerospace Industries Ltd. (IAI) (TASE: ARSP.B1) is considering a plan for changes in its organizational structure that will reduce its staff expenses, as part of a comprehensive recovery plan that management is promoting, in view of the financial crisis that has afflicted the company in recent years. Informed sources told "Globes" that among other things, the emerging recovery measures were devised in view of the start of negotiations between company management and its workers organization. In the past, the workers organization attacked IAI management for its efforts directed towards recovery of the company's civilian divisions, which have accumulated heavy losses in recent years, instead of focusing efforts on cutting management expenses by reducing the number of company VPs and using costly external consultants.

IAI's comprehensive recovery plan includes voluntary retirement by 1,200 employees, mainly in the civil aviation division and Bedek Aviation Group. In an attempt to expedite this plan, the company is conducting discussions with the Ministry of Finance about financing the over NIS 1 billion (estimated) in retirement costs for these workers. At the same time, informed sources said that despite the measures aimed at structural change in the company, management had no intention of cutting down on the number of VPs, which is considered high, after rising from 17 to 21 in recent years. IAI believes that the number of senior executives should not be reduced under the recovery plan, because given the company's 17,000 employees, the number is reasonable, in comparison with other companies of the same size.

Signs of organizational changes in the company are already visible: IAI VP marketing Sharly Ben-Chetrit will soon leave his position and be appointed the company's VP marketing in the US. VP special projects Jehezkel Grizim announced his resignation in recent weeks after serving in senior positions at the company for decades. Informed source said that the coming months would feature further personnel changes at senior levels, coupled with consideration of how essential certain functions are and the possibility of combining a number of positions into one.

Meanwhile, in recent weeks, IAI published two tenders for hiring new marketing VPs and a legal advisor.

Published by Globes [online], Israel business news - www.globes-online.com - on March 10, 2016

© Copyright of Globes Publisher Itonut (1983) Ltd. 2016

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