Ownership of state-held Israel Aircraft Industries (IAI) will have to change if it is to form strategic alliances with other aerospace companies, says president Moshe Keret.

"It is too early to talk of a US company taking an equity stake in IAI. A lot of work has to be done inside Israel first," he says.

Using the gradual privatisation of Israel's telecommunications sector as an example, Keret says: "It will not be an overnight revolution, rather an evolution which could start next year." The process could begin, he says, with a stock offering.

IAI has joint ventures with companies outside Israel, involving specific products or markets, "-but it is difficult to do more as a government-owned company", Keret says. "A strong driver to change the ownership is to enable IAI to participate in international programmes, acquisitions and spin-offs, in the USA and elsewhere," he adds.

It is too early to say how an ownership change would be achieved, Keret says, as the Israeli Government "is not set up" to privatise IAI in one step. Although he "-cannot indicate when and how, there definitely will be a change-we have to prepare ourselves for the next century".

IAI, meanwhile, could reach its goal of hitting the $2 billion sales mark in 1999, a year earlier than planned. Sales were up by 15% to $1.7 billion last year and the company moved out of the red for the first time in five years with a net profit of $24.3 million.

Keret expects sales to be up by about 10% this year, to close to $1.9 billion. IAI has reported a $10 million net profit for the first quarter.

The company's firm order backlog, which grew by 25% last year to a record $3.2 billion, is also forecast to increase this year. The proportion of non-defence sales is expected to go up from the 1997 level of 35%, which beat IAI's 1993 commitment to boost commercial revenues to 20-30% of the total within four years.

Source: Flight International