Elbit Systems has won a major contract with state-owned Israel Aerospace Industries to supply maintenance and other services for fighter-trainer jets to the Defense Ministry, the defense electronics company announced on Monday.

The contract is worth $603 million, or NIS 2.4 billion, of which $420 million will be performed by Elbit. The two companies will operate through a joint venture called TOR and will include maintenance and logistical services as well as simulator systems for the Air Force's next-generation pilot-training program using aircraft being acquired from Italy.

"The new, advanced avionics systems to be supplied by Elbit Systems for the project will improve the readiness of the IAF's pilots in operating next-generation aircraft," the company said.

The Defense Ministry signed on the first tranche of the project, with an initial order of NIS 108 million as well as financing. The full contract is expected to be signed in the coming weeks, following the finalization of several financing procedures, Elbit said.

In July, Italy's Alenia Aermacchi signed a $1 billion contract with the Defense Ministry to supply 30 M-346s to replace American-made Douglas A-4 Skyhawks. The first delivery is slated for the middle of 2014. The agreement calls for the Italian Defense Ministry to purchase Israeli military equipment.

"The agreement replaces the aging Skyhawks, injects billions of shekels into the Israel defense industry and ensures workplaces for thousands," said Uri Shani, the Defense Ministry's director-general.

TOR is acquiring the aircraft instead of the Defense Ministry and providing training to IAF pilots. Finance is being provided by Italian banks and insurance companies, as well as by Bank Hapoalim and the Israeli Defense Ministry.

Elbit's share in the first part of the contract - under which Elbit will establish an enhanced logistics support and maintenance infrastructure for the new trainer, as well as an advanced ground training array - is $110 million over three years. Under the operational part of the contract, which will run for 20 years, Elbit will provide logistics services for the trainer and the new aircraft array, valued at approximately $310 million.

Shares of Elbit rose 1.4% in Tel Aviv Stock Exchange trading on Monday and were up a sharper 4.5% to $32.40 in Nasdaq trading at 2:15 P.M. New York time.