Special to WorldTribune.com

WASHINGTON — Another Israeli defense major has reported a drop in
profit in wake of a canceled military project with Turkey.

The state-owned Israel Aerospace Industries reported a drop in net
profits during the fourth quarter of 2011. IAI attributed the decline to
Israel’s cancellation of a Turkish aerospace contract in December.

Diplomatic and strategic relations between Israel and Turkey sharply deteriorated following the  killing of nine Turks during an Israeli operation to stop a flotilla ships trying to break its blockade of Gaza in 2010. Tensions increased over Jerusalem’s refusal to meet Ankara’s demands for an apology and Israel’s concerns about Turkey’s warming security ties with Iran.

“Net profit for the fourth quarter totaled $1 million, compared to $14 million in the same period in 2010,” IAI said. “Cancellation of export license for a transaction in Turkey resulted in a
decrease in sales and profitability for the quarter.”

In a statement on March 29, the company also reported a three percent decrease in sales during Q4 compared to the same period in 2010. Income for what was termed “ordinary activities” rose to $10 million from the fourth quarter in 2010.

“Improvement in profitability from company operations was achieved by adherence to project milestones, risk-reduction in company projects and a strengthening of the U.S. dollar,” IAI said.

IAI became the second Israeli defense firm that reported a profit
decline from the cancellation of the Turkish contract by Israel’s Defense
Ministry. On March 14, Elbit Systems reported a 50 percent drop in profits,
also attributed to the last-minute cancellation of the Condor-2 Long-Range
Oblique Photography System, meant to provide the company with up to $65
million.

IAI said its backlog reached $8.7 billion at the end of 2011. IAI said
84 percent of the backlog was allocated for export.

For 2011, net profit totaled $83 million, down from $94 million during
the previous year. Sales rose by nine percent and reached 3.4 billion
compared to the previous year. Military sales reached $2.5 billion, a five
percent increase, and commercial sales rose by 21 percent, or $928 million.

“The recovery in the commercial market was primarily in the field of
aircraft maintenance and conversion,” IAI said. “The executive aircraft
market has yet to recover from the global economic crisis.”

  Condor-2 Long-Range Oblique Photography System, Deterioration in Israel-Turkey ties causes huge profit decrease for defense firm, Elbit Systems, Israel Aerospace Industries, Israel Defense Ministry