Israel Aerospace Industries (IAI) Chairman Boaz Levy warned on Thursday that the Defense Ministry’s debt to the company, totaling nearly NIS 6 billion, is making it more difficult to maintain production levels during wartime, while calling on the Finance Ministry to release additional budgets and the Defense Ministry to settle outstanding payments.
Levy made the remarks in an interview on 103FM, where he discussed the ongoing dispute between the Finance Ministry and the Defense Ministry and its potential impact on Israel’s defense production efforts.
"The Defense Ministry is indeed the main customer of Israel Aerospace Industries. We are a national, government-owned industry, and there are people here who work 24/7. People who work and produce," Levy said.
"However, the debt of the Defense Ministry to us currently stands at close to NIS 6 billion. That is a lot of money for a company. This debt is supposed to be closed through additional budget allocations. On the other hand, the budget is supposed to grow because we are in a war and need to produce more."
Levy said that despite the financial pressure, IAI has not delayed production.
"At this stage we are not holding anything back; the company is carrying the burden and continuing forward. Every day that passes makes it harder for us to do this. It is clear that it is very difficult to carry out production on such large scales when there are such debts. I very much hope that these funds will be transferred soon," he said.
This is a very clear call to the Finance Ministry to transfer the budgets and to the Defense Ministry to pay us the debts that are owed. These issues are discussed on a daily basis, and it is not for nothing that you heard the Defense Ministry’s position several days ago," he added.
IAI IPO process continues
Levy also addressed the possibility of an IPO for IAI, saying the process remains ongoing but could still take time.
"An IPO of Israel Aerospace Industries is a national event. Raising these funds helps the state. Ultimately, we are a government company, and the proceeds from the IPO also go to the state. The dividends we earn go to the state.
"We have been in a process lasting several years, since the government decision was made to issue shares in Israel Aerospace Industries. By the way, this would be a minority offering. Israel Aerospace Industries will always remain a government company," Levy said.
He added that the company had completed the steps needed to become a publicly traded company that reports its state every semester.
"We carried out a long process that enabled the company to issue a quarterly report. We are already a company with reported bonds. Clearly, being traded on the stock exchange is more than that. We completed our activities with the Defense Ministry, and we are currently discussing the issue of compensating disclosure with the Securities Authority," he explained
"After that, we will soon reach the Justice Ministry and receive approval for the confidentiality certificate. Following that, it will be possible to begin the IPO process, and because we are already reporting, the IPO process will be very fast," he added.
German navy tests IAI's LORA ballistic missile
Levy also discussed the successful test of IAI’s LORA ballistic missile in Germany and a possible future contract.
"There is not yet a deal, but we hope there will be one," he said. "History was made last night when the German navy vessel had the LORA system on board. Israel Aerospace Industries produces this missile; it is unique in its kind, and nothing like it exists in the world. It can reach hundreds of kilometers, an enormous range.
"This is what was demonstrated last night. We launched it over a long range, and its accuracy and its impact on the target were perfect, to the satisfaction of the German navy," Levy said.
He added that the production of both offensive and defensive systems is essential in the current security environment.
"The first ballistic missile in the world was invented by Germans, and here, after many decades, an Israeli missile is arriving to serve on a German navy vessel. I cannot say the scope of the deal, but I have no doubt that this deal will be completed," he said.
"In the world we live in today, we need to combine defensive capabilities with offensive capabilities. Just as we knew how to provide the Arrow system, place it on German soil exactly on the day we were required to, and provide these systems to the complete satisfaction of the Germans, so we will know how to provide the LORA system."
"The combination of each of these systems separately gives German decision-makers the room to decide when I go on defense, when I go on offense, and what balance I create between the two," he added.
Levy emphasized that the missile has already been proven operationally.
"This missile is an operationally proven missile for our forces around the world. We have been marketing it for many years; it has been implemented and proven. It knows how to do exactly what we expect it to do."