Freighter Conversion Demand Tilts IAI over to the Civil Side

 - September 19, 2011, 10:25 AM
An uptick in Bedek Aviation’s freighter conversion and maintenance activities are swinging the balance of Israel Aerospace Industries’ overall business strongly towards the civil side. (Photo: Israel Aerospace Industries)

Israel Aerospace Industries (IAI) is achieving faster growth on the civil side of its business than on the military side, for which it is arguably better known. The group’s recently published results for the first half of 2011 show civil sales up by 29 percent over the same period in 2010, accounting for $492 million out of total sales of $1.8 billion, which represented an 11-percent increase over last year’s results. By comparison, military sales grew by just 6 percent to reach $1.3 billion. So what lies behind the civil swing at IAI?

Most of the ground on the civil side has come from the highly specialized market for converting passenger airliners into freighters, according to Jack Gaber, IAI deputy vice president and general manager for marketing and business development at the group’s Bedek Aviation division. After a slump during 2009, when air freight became an immediate casualty of the global financial crisis, 2010 saw a strong recovery that has continued, but at a slower pace, into 2011.

Demand for Boeing 747-400 conversions is proving especially strong, Gaber told AIN, with IAI and Boeing being the only companies to offer the work. Bedek, which has specialized in 747 upgrades, modifications and conversions since 1991, also enjoys a strong position in the market for converting 767-300s and -200s, as well as 737-300/400s.

In Gaber’s view, the arrival on the market of the new 747-8F widebody freighter will not dilute demand for conversions of the older 747s. He said airlines can still find much better value from converting the older Boeing models, although limited availability of 767-300 airframes continues to constrain demand in that market. Earlier this year, Bedek revealed that it began working with two undisclosed Chinese companies to establish new freighter conversion partnerships.

Bedek is also seeing growth on the airliner maintenance, repair and overhaul side of its business, having recently expanded its capability to include the CFM International CFM56-3 engines, as well as International Aero Engines’ V2500s and Pratt & Whitney’s PW4000s. It has also started working on Airbus A340 airliners. The company has secured new airline MRO clients in Africa, Asia, Europe and the U.S. IAI’s civil operations also include manufacturing of Gulfstream’s G150 and G280 business jets.