Aircraft Spending Dispute Pending

A major dispute is brewing here over whether Israel Aircraft Industries (IAI) has spent too much money in developing and producing two airplanes, the turboprop, “Arava,” for civilian and military use, and the executive jet, the “Westwind.” The Israel State Comptroller in a report to IAI’s management has backed the criticism of some top economists that hundreds of millions of Israeli Pounds were wasted in developing the two aircraft, a charge which is denied by IAI.

IAI, the largest enterprise in Israel, together with its subsidiaries, employs some 14,000 persons. It is a government-controlled enterprise which gives the State Comptroller authority to check its operations. IAI is headed by its founder, the American-born Adolph Schwimmer, who smuggled into Israel its first bomber during the War of Independence.

The Arava, according to the Comptroller, has been sold to five Latin American countries, but there appears to be little other demand for it. He said there is little demand for the Westwind because of competition from other aircraft producers and the economic crisis in the world.

IAI officials have not commented on the report, but the aircraft company’s management had earlier claimed that if it had not been for the experience in developing and producing the two civilian planes, Israel would have had a much more difficult time in producing the “Kfir,” its new jet fighter. The IAI also claimed that defense orders slowed down civilian production.

Sources in the aircraft industry expressed surprise that the State Comptroller’s report had been made public. They noted that investment in the two planes had been spread out over a number of years and IAI’s balance sheet showed no loss in recent years. They stressed that every other aircraft manufacturer spends millions in planning and producing new planes. They claimed the Arava is a success and is being sold as fast as it can be produced.