Dogfight Underway for $10 Billion Israel Air Force Contracts

The IAF will be placing orders for fighter jets, refueling planes and transport helicopters as Lockheed, Boeing and Israel Aerospace Industries battle it out

Hagai Amit
Hagai Amit
Send in e-mailSend in e-mail
A Lockheed Martin F-35 plane
A Lockheed Martin F-35 plane Credit: Rick Bowmer/AP Photo
Hagai Amit
Hagai Amit

When Marillyn Hewson, the CEO of the U.S. defense contractor Lockheed Martin, was in Israel at the end of May, she took time off from meetings with Israel Air Force and Defense Ministry officials to dedicate a demonstration center and announce that Lockheed would be funding a science-oriented preschool in Jerusalem.

>> Subscribe to Haaretz today, save 25% - and stay updated on everything important

The company has good reason to be buffing up its image in Israel. The air force is putting the finishing touches on a 10-year plan with a budget topping $10 billion to buy and equip fighter jets, refueling planes and transport helicopters.

Lockheed Martin is facing competition for the three deals from Israel Aerospace Industries in some cases and from another U.S aerospace giant, Boeing, in others. Not only are the companies engaging in goodwill gestures, they are counting on their local agents – all of them ex-air force officers – to help them navigate the process.

In Boeing’s case, the company’s Israel office is headed by David Ivri, a former IAF chief. Lockheed Martin’s operation in Israel is led by Joshua Shani, a 30-year air force officer who is close to Prime Minister Benjamin Netanyahu. Shani was the pilot who brought the body of the prime minister’s brother, Yoni Netanyahu, back from the 1976 Entebbe raid.

But sources told TheMarker that it looks like most, and possibly all, the contracts will go to Boeing – unless the government intervenes.

That means that for the key fighter-jet contract amounting to about 25 aircraft, the IAF will be returning to Boeing as its main contractor after two decades with Lockheed. So far this decade, Israel has placed orders for 50 Lockheed F-35 stealth fighters at a cost of $5.5 billion and has an option to take 75 more. Before that, the IAF was buying Lockheed’s F-16. The last time it bought a Boeing jet was the F-15, and that goes back to the ‘90s.

>> Following Israeli deployment, U.S., European allies map out larger role for F-35 fighter

“There’s a logic to the dilemma between buying more F-35s and buying more F-15s,” said Zeev Raz, the former head of the IAF’s flight school and the pilot who led the 1981 raid on Iraq’s nuclear reactor. The F-35 has its advantages, but the F-15’s assets more closely match Israel’s needs.

“When the air force needs to bomb heavily and smartly, and hit varied targets in a short time frame, there’s nothing like the F-15,” Raz said. “When we look at the scenarios on the northern border, where the planes are dealing with many enemy missile launch sites that need to be destroyed quickly, there’s nothing like the F-15.”

Moreover, this might well be the last chance for Israel to acquire more of the aircraft. Unless Israel places an order soon, the F-15 production line will be closed after a big order from the Gulf states is completed.

Neither plane is cheap. The F-35 now sells for about $90 million, although its price is going down. By comparison, Saudi Arabia and Qatar have ordered scores of F-15s at a cost of $150 million to $200 million apiece – due to the high development costs of the jet’s latest generation. If Israel buys the F-15, it will pay less because Boeing will have already recouped the costs.

Cost is a consideration. Although Israel is due to be getting $3.8 billion annually of U.S. defense aid, it has other procurements to make in the United States and the air force can only use part of the money.

Part of the cost consideration is how much of the value of the jets can be produced in Israel. In the case of the F-15, Elbit Systems and IAI will be able to incorporate their electronics into the aircraft. In the case of the F-35, those technologies can’t be installed on the plane because Lockheed insists the insides remain a closed system. On the other hand, IAI is producing wings for the F-35.

The approximately six refueling aircraft are a contest between Boeing and IAI. Here Boeing is offering new 767 aircraft at a cost of $200 million to $250 million each. A win of the contract, as seems likely, will be a big boost to the company that has lost contracts to Europe’s Airbus in recent years.

IAI, which ironically developed the skills to make refueling aircraft in the ‘80s when Washington barred sales to Israel, would offer a much cheaper option that costs between $100 million and $150 million a jet. IAI has no plane-making capabilities but would refit older Boeing 767s.

If it fails to win the contract, it will be a big blow to the company’s already ailing Bedek Aviation.

The helicopter portion of the contract is to replace the IAF’s fleet of Yasur copters. The contenders are Boeing with its CH-47 Chinook tandem-rotor helicopter and Lockheed’s CH-53K made by its Sikorsky division.

The Chinook is the workhorse of many of the world’s armies and costs just $40 million. But the CH-53K, a new aircraft of which just a few have come off the production line, can carry bigger loads and has three engines to the Chinook’s two. There’s a good chance the IAF will order both models, the only question being how many of which.

Click the alert icon to follow topics:

Comments

SUBSCRIBERS JOIN THE CONVERSATION FASTER

Automatic approval of subscriber comments.
From $1 for the first month

Already signed up? LOG IN

ICYMI

Charles Lindbergh addressing an America First Committee rally on October 3, 1941.

Ken Burns’ Brilliant ‘The U.S. and the Holocaust’ Has Only One Problem

The projected rise in sea level on a beach in Haifa over the next 30 years.

Facing Rapid Rise in Sea Levels, Israel Could Lose Large Parts of Its Coastline by 2050

Tal Dilian.

As Israel Reins in Its Cyberarms Industry, an Ex-intel Officer Is Building a New Empire

Queen Elizabeth II, King Charles III and a British synagogue.

How the Queen’s Death Changes British Jewry’s Most Distinctive Prayer

Newly appointed Israeli ambassador to Chile, Gil Artzyeli, poses for a group picture alongside Rabbi Yonatan Szewkis, Chilean deputy Helia Molina and Gerardo Gorodischer, during a religious ceremony in a synagogue in Vina del Mar, Chile last week.

Chile Community Leaders 'Horrified' by Treatment of Israeli Envoy

Queen Elizabeth attends a ceremony at Windsor Castle, in June 2021.

Over 120 Countries, but Never Israel: Queen Elizabeth II's Unofficial Boycott