Israel Aerospace Industries chairman Yair Shamir is forging ahead with plans for the company's privatization, and is hoping for backing from the newly appointed budget director at the Finance Ministry, Udi Nissan. Nissan headed the Government Companies Authority until now, and has expressed his support for the privatization of the government controlled aerospace and defense firm.
Shamir wants to dual list IAI on the Nasdaq exchange and the Tel Aviv Stock Exchange, at a company value of $4-$5 billion, and offer 30%-40% of the company to investors.
"We might be able to advance this process in the coming months, thanks to Prime Minister Benjamin Netanyahu's policy supporting the privatizations," says Shamir, who stresses that he is well aware nothing can move forward without an understanding of principles with the workers' committee. "Until matters are settled with the workers' committee, everything is theoretical."
IAI published its financial statement for the first quarter of 2009 on Tuesday. Net profits were down 62% from the first quarter of 2008, to NIS 15 million, and sales shrank by 24%, to $775 million.
Since the beginning of 2009 IAI has signed early retirement agreements with 120 employees, provisioning $16 million for this purpose, and is continuing to hold buyout talks with dozens more workers.
The company's civil aviation division, which manufactures, renovates and maintains planes for the civilian market, had first quarter sales of just $193 million, down 49% from the parallel. Sales in the defense division were down 7%, to $571 million. One of IAI's ambitions is to bring the company's sales in the civilian sector on par with sales to the defense market.
Since the beginning of the year IAI has received over $1 billion in orders, bringing accumulated orders to a total of $8 billion. Cash flow from current operations grew by $190 million, to $312 million.
"The company's strengths - such as financial stability, and a broad, geographically diverse customer base - are helping it weather the global economic upheaval, and we hope to take advantage of business opportunities that come our way as a result of this situation," says Shamir.
CEO Yitzhak Nissan notes that the company is closely supervising and streamlining operations, in order to lower costs and meet company goals.
"We have reduced our consulting staff and cut overtime hours, and increased the efficiency of purchasing and supplier management," says Nissan.
These measures have already improved gross profitability from 13% to 17%. The company plans on instituting further streamlining measures as the global crisis in civil aviation continues.
"We will also crank up our marketing efforts in the military sectors," says Nissan. "IAI is continuing to implement its globalization policy."
The company's board recently approved the establishment of a joint company with Synergy Group, of Brazil, and is in the process of establishing a joint Indian company with the Tata conglomerate.
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