"Israel is working on space warfare capabilities," CEO of Israel Aerospace Industries Boaz Levy revealed in an interview with Israel Hayom on the occasion of the company's 70th anniversary.
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He said that the challenges developing around Israel, especially from Iran, are demanding, but that Israel currently possesses the ability to respond, and is busy with "always staying a step or two ahead."
The last few years have been very profitable for the aerospace industry in particular, and defense industries in general, as the outbreak of the Ukraine war created plenty of opportunities in the field. Western Europe is concerned about the possibility of a larger war, for the first time since World War II, which has led to a significant increase in defense budgets and the procurement of various weapons. According to Levy, the main lesson from the war is the need for integrated systems, so-called systems of systems.
"We can no longer look at individual systems, but one thorough system that gets a continuous picture from satellites in the sky, is based on artificial intelligence elements, which can process large amounts of information and knows how to synchronize defense and weapon systems."
Q: Let's break this down. What is the West mostly interested in now?
"First of all, in defense capabilities – from the way we detect the threat, i.e. different radars and satellites, to complex systems that do air defense such as the Arrow or Barak systems, which is both sea and land. With these systems, you can detect the threat with one radar, activate a battery in another place and release a missile from a third battery."
As part of the increased interest in defense systems, there have been intensive negotiations between the Israeli and German governments with regard to the procurement by Berlin of the Arrow 3 missile defense system at an estimated cost of three billion euros ($3.3 million).
"We haven't signed yet," Levy said. "There is a triangle of decision makers here – in Germany, Israel, and the United States, because the Arrow system was developed in cooperation with the American Missile Defense Agency. The Arrow system is currently the leader in the world in intercepting ballistic missiles, and Arrow 3 allows interception deep in space, far beyond the atmosphere, so that any missile launched toward a threat area can be dealt with on several occasions.
"This is a system that was born out of an Israeli need to defend ourselves, and it partners with the Barak system – with missiles at ranges of 30, 70 and 150 kilometers, which allow the interception of various types of missiles, including ballistic ones, as well as airplanes, cruise missiles, and drones ".
These threats are relevant not only to Europe, given Russia's use of drones in Ukraine, but also to Israel, which is threatened by the same drones by Iran and its proxies in the region.
"We are in a ring of threat and constantly have to be one or two steps ahead of our enemies. We are constantly busy thinking ahead, which will allow us to stay ahead of the threats around us."
Q: Can you elaborate on Iran?
"We understand the technological development on the other side, and it is mainly related to the ability to detect and intercept – the need to detect the threat, track it, project its trajectory, and choose the most appropriate point to intercept it. As I said, one system cannot do all of these, because it is a complex response that includes both interceptions outside and inside the atmosphere, and this requires radars of different wavelengths so that we can detect the threat and intercept it."
Q: How would you rate Iran's capabilities at this time?
"This is an ongoing war, with missiles that have different capabilities, some of which are more successful and some less so, but the score is not bad, and our job is to take all their systems and know how to give them the required response. I think we are not in a bad place at all from what we see."
The space front
Since the beginning of 2021, the IAI has launched two observation satellites into space: the EROS-C3 advanced observation satellite whose technologies enable high-resolution images and for the first time use of a multi-spectral camera, and Ofek 13, an observation satellite with advanced capabilities.
"Both are now in space, passing over us every hour and a half and downloading images of unprecedented quality and accuracy for Israel."
Q: Can you explain this in layman's terms?
"We are all used to pulling out our cell phones and taking photos of quality that is not bad. Now imagine that we pull out our cell phones at an altitude of 500 kilometers above us, and receive a picture of almost similar quality, one that allows us to distinguish significant details and know exactly what is happening."
Q: So much so that you can identify faces?
"That's still a bit complicated, but I'm sure we'll get there."
Interestingly, over a decade ago, the IAI was on the verge of going out of business. The prevailing thought was that satellites could be purchased abroad, saving on the major costs of development, launch, and maintenance. However, the information revolution and the need to maintain independence in the intelligence-operational field led to the opposite decision – to increase investment in satellites and to build and launch more satellites into space.
According to Levy, Israel currently has sufficient coverage in terms of territory but needs more satellites for more continuous coverage, that is, to minimize the time gap between each passage of the satellite over a particular point. As part of these preparations, the Defense Ministry is promoting a space program that will include not only observation satellites but also communication satellites.
"The war in Ukraine has taught us that communication satellites – the ability to receive the broadcasts from the ground and return them – is critical, and is a strategic asset for Israel," he said.
"I think the world knows that we have very good capabilities in this field, one of the best there is, in all aspects – both in resolution, in wavelength, at day and night time – and therefore there is a lot of interest in what we do."
Q: The world has once again turned its attention to space weapons. Is it something you are also involved in?
"We are listening, of course, and also thinking about it. The innovation systems in the IAI operate in all areas, and we always try to be ahead of the others. We are studying this subject, and trying to understand how it would be possible to combine capabilities of this type most optimally. This is an area in which all the superpowers are investing, and if you ask me if I see it happening – then yes, I see it happening, but I don't know when it will happen."
Levy also spoke of the Lavi single-engined fourth-generation multirole jet fighter, the development of which caused controversy in Israel, due to the enormous associated costs, and was ultimately nixed by the government after decades of criticism.
"When you have no choice, you do it," he said. "And when you have another choice – it is not economical to do it. But it is necessary to maintain the ability, and we are maintaining it. The IAI has the only production line in Israel for a jet, albeit a business one, but it is a jet that is fully designed and manufactured here."
Q: And should the need arise, will you also be able to create a jet fighter as well?
"Assuming there's a need and there's a budget, we will know how to do all of it. We are in this field in all its aspects."
Levy, 61, holds a bachelor's degree in Aeronautical and Space Engineering, and a master's degree in Systems Engineering, both from the Technion in Haifa. He has worked in the aerospace industry since 1989, and most of the time oversaw the development of air and space defense systems and was a member of the founding team of the Arrow Program Directorate. He was appointed interim president of the IAI in November 2020, an appointment that became permanent last year.
Like his counterparts in the other defense industries, Levy rarely gives interviews – a result of the inherent discretion in the field, the demands of the customers and the sensitivity involved.
His decision to be interviewed by Israel Hayom stems not only from the prosperous business period that the company is going through but also from the timing – the IAI's 70th anniversary which coincides with Israel's celebrations of its 75th Independence Day.
"The history of the IAI is closely intertwined with the history of the state," Levy said. "It started as a need to provide care for the planes that arrived at the founding of the state. Equipment was brought here, and there was no one to care for the planes and restore them to serviceability, and that's how a factory was established from where today's IAI developed."
Since then, the company has always been there to cater to the state's needs.
"In the 1960s, when Israel faced an operational problem, the IAI brought [the] Gabriel [skimming anti-ship missile], the first sea-to-sea missile of its kind. And when Israel faced an embargo on transport aircraft, the company invented the Arava [utility transport] aircraft.
"When there was an embargo on fighter jets, the Kfir [all-weather multirole combat aircraft ] and the Lavi were developed, and when there was a need to protect against ballistic missiles, the IAI developed the groundbreaking Arrow system. And there is also the UAV – a real need to bring intelligence with autonomous capabilities, which we already brought in in the 80s, and of course satellites – after we returned [the] Sinai [peninsula to Egypt in 1982 following the 1979 Peace Treaty] and required another eye in place of the returned territory, we brought this eye from space, and this is how the IAI was founded. There is no other company in the world that does all of it."
Q: So how does Israel do it all?
"We are a government defense manufacturer that can fulfill the needs of the country. You can talk to us about the most sensitive things and do the most complex operations with us. Our engineers are senior officers in the military, who sit in their units and identify the need or the operational gap, and then return to the factory and work on closing this gap, then return to as part of reserve duty in the units and operate the tools they have developed. This is a unique coming full circle, which connects us to our main customer, the Defense Ministry."
Such work is being conducted with serious competition from international business rivals. Only about a quarter of the IAI's sales volume is in Israel, and the rest is abroad. According to Levy, technological advantage is the way to win.
"We are a company of 15,000 employees, of whom 6,000 are engineers, of whom 2,000 have masters degrees and doctorates. They bring us solutions. As a government company, with the salaries set by the state and competition from outside, it is not an easy challenge to maintain this human capital."
The key to winning in this business competition, he said, is in adapting each system to the specific needs of the customer – from the development and production stage to operation and maintenance. In addition, the fact that many of the systems were procured by the IDF and have proven themselves operationally is a significant sales factor against competitors. And as mentioned above, the war in Ukraine, and the urgent need that arose for reliable combat systems, increased the demand to an unprecedented level.
This was reflected in the IAI financial data as well, which previously fell upon harder times.
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"We had a few difficult years," Levy admitted. "The industry was rocky, and then the pandemic came, which leveled us all. But COVID was also an opportunity for us, because we showed our customers that we are reliable.
"We worked all over the world during the pandemic, we sent out shipments, we kept up with it. Customers told us that we were the only ones who delivered the products when they needed them, and I think this is part of the change that led to the good performance in the last two years."
In 2022, the IAI broke a record with sales amounting to approximately $5 billion and new contracts amounting to $7.4 billion, which were added to a backlog of orders that currently stands at approximately $16 billion.
"Our profitability has also increased and is the highest it has ever been, and we understand that only a company that is profitable will be able to sell worldwide."
Q: Is privatization or IPO still on the agenda?
"IAI enjoys the fact that it is a government company, and it will remain a government company forever. Even when we talk about an IPO, we are talking about a minority IPO, and the controlling stake will always remain with the state, because of the very special things we do for Israel's security. And yet, we look forward and strive for an IPO because there are things that need to be changed, such as employee wages or company procurement, which will allow us to be more flexible like other business companies in the market, and I assume that will change after the IPO."
Q: Do you have an idea as to when that will happen?
"There is approval from a ministerial committee from November 2020, and I assume that it will mature in the current government and we will launch a minority IPO. I don't know when exactly this will happen and to what extent, but it should happen in the next year or two so that the IAI will continue to grow as an international company, which will acquire companies abroad and conduct some of its activities there."
Q: Did the Abraham Accords help expand opportunities for the IAI?
"The accords opened our horizons in several aspects. First in regional cooperation, then in technological-business cooperation, and finally in cooperation in weapons systems. There are contacts, there are processes, the issue is under the leadership of the Defense Ministry, and we are doing everything to assist and promote it."
