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Lockheed Jet Deal Worth $900 mln for Israeli Firms
July 17, 1999 (by
Lieven Dewitte) -
Israeli defense firms will get $900 million in new contracts as part of Lockheed Martin Ltd's $2. 5 billion jet fighter deal with the Jewish state, officials said on Sunday. Lockheed, which beat Boeing Co in the plane competition, committed to the industrial cooperation figure during months of tough negotiations with Israel. The contract is expected to be signed by August 20.
One industry official involved in the negotiations said the $900 million industrial cooperation figure was included in the contract, details of which neither Lockheed nor the ministry would release. Nearly 25 percent of the plane's components will be manufactured in Israel by five defense firms, among them state-owned Israel Aircraft Industries (IAI). IAI will get a $400 million share of the contracts pledged by Lockheed.
A Lockheed spokesman said on Friday the sale would generate some $1.8billionfor the company and $700 million for other components makers. Industry officials say the $900 million in revenues seen by Israeli defense companies would include earnings from contracts not directly related to the F-16 deal. An Israeli defense industry official said the industrial cooperation would mean real profits for Israeli firms only if their components were integrated in Lockheed planes sold to other countries and not just Israel. "In Israel we're talking about just 50 planes. That's not enough. We have to wait and see if Lockheed will be ready to integrate (Israeli firms) in its outside deals, " the official told. IAI-made conformal fuel tanks attached to the single-engine F-16 increased the plane's range to nearly match Boeing's twin-engine F-15, giving the Lockheed plane an edge over Boeing in the Israeli competition.
In its last tender, in 1994, Israel had chosen the more expensive Boeingjet, saying that it needed long-range fighters to counter potential belligerence from far-away Iraq and Iran. The air force, which argued for the cheaper F-16 planes in the latest competition, will retire nearly 100 older model fighters when it takes possession of the planes, starting in early 2003. Israel already has 260 F-16 planes, the second-largest fleet outside the United States. Lockheed delivered the first of its F-16 jets to Israel in the early 1980s.
A Lockheed spokesman said on Friday the sale would generate some $1.8billionfor the company and $700 million for other components makers. Industry officials say the $900 million in revenues seen by Israeli defense companies would include earnings from contracts not directly related to the F-16 deal. An Israeli defense industry official said the industrial cooperation would mean real profits for Israeli firms only if their components were integrated in Lockheed planes sold to other countries and not just Israel. "In Israel we're talking about just 50 planes. That's not enough. We have to wait and see if Lockheed will be ready to integrate (Israeli firms) in its outside deals, " the official told. IAI-made conformal fuel tanks attached to the single-engine F-16 increased the plane's range to nearly match Boeing's twin-engine F-15, giving the Lockheed plane an edge over Boeing in the Israeli competition.
In its last tender, in 1994, Israel had chosen the more expensive Boeingjet, saying that it needed long-range fighters to counter potential belligerence from far-away Iraq and Iran. The air force, which argued for the cheaper F-16 planes in the latest competition, will retire nearly 100 older model fighters when it takes possession of the planes, starting in early 2003. Israel already has 260 F-16 planes, the second-largest fleet outside the United States. Lockheed delivered the first of its F-16 jets to Israel in the early 1980s.
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