Israel Aircraft Industries (IAI) may be forced to lay off some of its workforce following the recent loss of contracts and competitions. The company says "hundreds" of job losses may be necessary, mainly in its design operation, after setbacks on key airborne early warning (AEW), intelligence satellite, helicopter and regional jet design and assembly projects.

IAI was recently forced to cancel its Phalcon AEW contract with China following US pressure. The company expects compensation, but has so far not received any assurances from the Israeli or US administrations.

IAI also lost two Turkish competitions. One, for the supply of an intelligence satellite, was reopened soon after IAI appeared to have won the contract, while in the other the Kamov KA-50 combat helicopter, upgraded by IAI, lost to the Bell AH-1 KingCobra after a close race.

Most recently, IAI's civil aircraft division suffered a serious blow when Fairchild-Dornier cancelled the 428JET programme.

IAI was due to design and manufacture the fuselage of the aircraft, carry out final assembly and handle the entire certification process. IAI is set to lose "tens of millions of dollars" from the 428JET cancellation .

The company says the impact of these losses will soon be felt. "We will have to adapt the workforce to the new situation," says a senior source at the company, adding that the immediate effect will be on design teams and software experts, and may result in "hundreds" of layoffs.

IAI already faces a brain-drain to Israel's booming private sector high technology companies, which offer better pay, and the sources fear the net effect of these pressures may be to cause a depletion of its "most critical know how centres".

Source: Flight International