Israel Aerospace Industries

Israel Aerospace Industries

Israel Aerospace Industries is Israel’s largest aerospace and defense manufacturer, wholly owned by the Israeli government and headquartered in Lod. It began in 1953 as Bedek Aviation, an aircraft maintenance house, and grew into a prime contractor covering air and missile defense, unmanned aircraft, loitering munitions, radar and electronic warfare through its ELTA Systems subsidiary, satellites and launchers, and commercial passenger-to-freighter conversions. The Israeli Ministry of Defense is its single largest customer, but exports supplied $4.88 billion of 2025 sales, or 66% of revenue.

Key Products

Arrow — long-range ballistic missile defense, co-developed with the United States, and now IAI’s most commercially consequential line. Germany received its first Arrow 3 battery at Holzdorf air base in December 2025, the system’s first deployment outside Israel or the US. IAI signed a follow-on contract worth about $3.1 billion in January 2026 that takes the German programme past a reported $6.5 billion.

Heron family — medium-altitude long-endurance UAVs exported to India, Germany, Canada and others. The current variant is the Heron Mk II, which IAI says reaches 35,000 feet and 45 hours of endurance; the original Heron and the larger Heron TP (Eitan) remain in service.

HAROP and Harpy — loitering munitions. IAI says it originated the category in the 1980s. Both have been exported, most visibly to Azerbaijan.

Barak and LORA — naval and land air-defense interceptors, and a containerised long-range ballistic missile. The German Navy test-fired LORA from the frigate Sachsen-Anhalt in September 2026; Berlin has not committed to buying it.

Aviation Group — freighter conversions and maintenance, $1.61 billion of 2025 revenue.

Financial Position

IAI reported calendar 2025 revenue of $7.38 billion, up 21% on $6.11 billion in 2024, with net income of $712 million and an order backlog near $29 billion. First-half 2026 revenue was $4.275 billion and net profit $449 million, with backlog reaching a record $35 billion at 30 June 2026.

The balance sheet tells a harsher story than the income statement. Second-quarter 2026 cash flow was negative $795 million against positive $170 million a year earlier, because the Israeli defense ministry — locked in a budget dispute with the treasury — owes IAI roughly NIS 5 billion. Boaz Levy, chief executive since 2020, became chairman in May 2026, the first serving CEO of an Israeli state company to also chair it; Guy Bar Lev was named CEO in July 2026. Levy says an IPO of about 20% on the Tel Aviv exchange is closer than ever, but reporting ties any listing to the aftermath of Israel’s October 2026 election. There is no public listing today.

Why It Matters

IAI is the rare defense supplier whose flagship product has a combat record its competitors cannot match, and Arrow’s interception of Iranian ballistic missiles converted that record into European orders. The offsetting risks are political and financial rather than technical. Slovenia banned arms trade with Israel in August 2025 and Spain imposed a full embargo in September 2025, and IAI cannot control which market closes next. Meanwhile a record backlog is worth less than it looks while the company’s largest customer is not paying its bills.