Itzhak Nissan is president and chief executive of Israel Aerospace Industries, a diverse manufacturer active in corporate aviation, defence, space, maintenance and conversion, and unmanned air vehicle markets. He tells Arie Egozi why it is business as usual for the company at this year's show
How is the worldwide recession affecting IAI in the military and civil markets?
The world recession is indeed a major concern today, and we have taken many steps to ensure that IAI will emerge from this downturn intact. So far the recession has not affected our military business, but our civil aviation activities are naturally hit by the downturn. We have adjusted business plans to cater for the current and anticipated slowdown in civil aviation. We hope that as the aviation business recovers, we may return to pre-crisis activity levels within about two years.
Even though the recession may eventually be reflected in national defence budgets, we have reasons to be confident that our defence business will not be affected, and may even grow.
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Has the situation created a greater need for joint ventures and acquisitions?
The majority of IAI's business is done outside Israel. To succeed and to grow in our export markets our strategy is to co-operate with local industries. In recent years IAI has established local companies in various key countries, as joint ventures with local industries or as fully owned subsidiaries. Strong local presence in our target markets is a well established goal of IAI, regardless of current events. This strategy will also serve us well as we cope with the challenges of today's economy.
What will be your main growth engines in the coming years?
IAI is a world-class developer and producer of advanced systems, both military and civil. We expect our traditional growth engines to continue to support us, even though growth in our civil aviation business is temporarily "on hold". We are also pursuing new business in areas of green energy, homeland security and other innovative new projects, such as the recently approved Arrow 3 anti-ballistic missile defence system.
Israel has recently entered the space sector. Is space a potential market outside Israel?
Space is one of IAI's growth engines, and we have developed world-class in-house space capabilities. IAI particularly excels in high performance small-to-medium size satellite systems. Our space activities are divided into two categories: low orbit high-resolution imaging, and geostationary communication satellites. We are also investing R&D in SAR satellites as well as in micro and nano satellite applications.
Our innovation and flexibility enable us to be successful in the world market, and some of our international space activities are well known. IAI pursues international business opportunities in space as an independent vendor and via international collaborations. One example is our Tecsar imaging radar satellite family, which provides high-resolution, all-weather radar pictures. We have teamed with Northrop Grumman to offer this to US government branches.
Is IAI still interested in taking part in a regional jet programme?
Although the current business environment may delay the realisation of a successful regional jet programme, we believe in its viability. We will continue to pursue our regional jet initiative and seek global partners for this programme.
With two business jets on the assembly line, what steps must be taken to survive the downturn in this market?
As in the rest of the world, our current orders and backlog for business jets has shrunk over the last year. We have already adjusted our operations to accommodate this slowdown, and we will be ready to increase production rates when the market is ready for it. Work on the newest business jet that we are developing for Gulfstream, the G250, is advancing as planned, and it will be ready in time for recovery in this market.
How does IAI manage to compete with much larger aerospace companies?
IAI has mastered an exceptionally wide and balanced portfolio of products and technologies. Indeed, such a portfolio befits a much larger, major international aerospace company. IAI has set its sights on large-scale, integrated systems of systems to leverage on our own wide range of platforms, systems and subsystems. IAI strives to be among the world's leading companies in each of its business areas.
Have you scaled back your presence at the Paris air show this year?
IAI's presence at the Paris air show reflects our approach to the current global situation. We have not cut our presence this year, and we will be there as always, proud to present our products and systems that were approved for public display.
What are your expectations from the show under the current circumstances?
We expect to have a great air show. In the face of mounting challenges in the global market, international marketing efforts and new business initiatives are ever more important for our future, and the Paris show is a great place to start.
How likely is it that IAI will be privatised?
Privatisation is a long-term goal of ours, which we expect will have a great positive impact on the company. Although we are doing well business-wise, being a government owned company also imposes some restrictions in certain areas - for example, getting approvals for the purchase of companies.
The issue is complex, and it won't happen overnight. IAI's employees union and the Israeli government are major factors in making this a reality, and getting their go-ahead is a prerequisite to proceeding. There is an ongoing dialogue with both.
Source: Flight Daily News
