A Ministry of Defense delegation in the US last week signed a follow-on deal to buy 14 F-35 stealth warplanes. The ministerial procurement committee, headed by the Prime Minister, approved the purchase on November 30, 2014.
The deal, which was signed by the Joint Strike Fighter (JSF) project administration in the US Department of Defense, includes the purchase of 14 planes, with an option to buy 17 more. This deal is an addition to the previous deal signed in September 2010 for the purchase of 19 planes, making a total of 33 F-35 Lightning planes at this stage at an average price of $110 million per plane for the two deals.
In addition to the purchase of the planes, the estimated $2.82 billion total amount of the current deal includes development and integration of Israel weapons and aeronautic systems in the planes, as well as logistical support infrastructure for the entire array of planes, flight trainers and ground crew trainers, training, spare parts, and maintenance capabilities in Israel. Setting up the infrastructure in Israel is expected to provide tens of millions of shekels for strengthening local industry.
As part of its effort to promote Israeli industry, the Ministry of Defense led an industrial cooperation agreement with Lockheed-Martin and Pratt and Whitney, under which deals totaling $688 million have been signed to date. In this framework, and as part of the Ministry of Defense's efforts to integrate Israeli industries in the production of the planes and their accompanying systems, Elbit Systems Ltd. (Nasdaq: ESLT; TASE: ESLT) won a contract to produce pilot helmets and other parts for the plane. Israel Aerospace Industries Ltd. (IAI) (TASE: ARSP.B1) will make the wings for the plane, and has already set up an impressive advanced production line in Israel for the purpose. Other industries in Israel are also involved in the production of sub-systems for the plane and operative and training software.
Israeli delegation head Aharon Marmarosh said, "The first two F-35 planes purchased by the Ministry of Defense will land in Israel towards the end of 2016, and more planes will be supplied each year until 2021. We have always insisted, and will continue to insist, that as many Israeli industries as possible be included in the project, and that a maximum of a budget allocations be returned to the Israel defense industry for the development and production of special Israel capabilities and weapons."
Published by Globes [online], Israel business news - www.globes-online.com - on February 22, 2015
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