Lavi Backers Mull Issuing Shares of State-owned Aircraft Industry

The State-owned Israel Aircraft Industries (IAI) may go public in order to produce the Lavi fighterplane. This is one of the possibilities under study by Likud ministers who want to keep the project alive without putting additional burdens on the Treasury or the defense budget.

Defense Minister Yitzhak Rabin and Finance Minister Moshe Nissim reportedly have concluded that the defense budget cannot sustain production costs of the Lavi, and no additional funds are available. The design and development costs were borne so far by American military assistance grants.

Now supporters of the project are seeking other sources. They hope the Israeli public and investors abroad would respond favorably if IAI decided to issue shares. Haaretz reported Wednesday that an IAI-Israel Defense Force panel headed by a brigadier general is examining proposals to reduce the Lavi’s costs by $70 million annually.

This would require wage reductions and additional dismissals. The plan could not be carried out without the agreement of the worker’s committee representing IAI employees. Haaretz said IAI proposes to invest $38 million from its own resources, but even if the cost-reduction program were adopted, another $61 million would be needed this year to continue the Lavi.

Hadashot reported that the IAI management has informed the worker’s committee that it cannot pay salary advances to its employees because of the company’s financial straits.

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