Israel Aerospace, Etihad to open aircraft conversion site in Abu Dhabi

Reuters

Published Aug 25, 2021 02:12AM ET

Updated Aug 25, 2021 02:46AM ET

By Steven Scheer

JERUSALEM (Reuters) -Israel Aerospace Industries (IAI) said on Wednesday it signed an agreement with Etihad Engineering to establish a facility in Abu Dhabi that will convert Boeing (NYSE:BA) 777-300ER passenger planes into cargo aircraft.

The new facility, which will operate as the company's maintenance centre in Abu Dhabi, aims to meet the growing demand for large cargo jets.

"Not only do we see the demand, but we view it as a greener, more profitable, highly innovative solution for our airline customers, and an excellent way to drive value for our business," Tony Douglas, chief executive of Etihad Aviation Group, said in a statement.

Demand for cargo plane conversions has been on the rise with the increase in ecommerce and the decline in value of used planes during the COVID-19 pandemic.

State-owned IAI currently converts Boeing 737, 747 and 767 passenger aircraft for cargo use. It has said it is currently developing a conversion method for the Boeing 777 and expects to finish the licensing process in 2023.

The deal comes a year after Israel and the United Arab Emirates agreed to normalise relations under the U.S.-sponsored Abraham Accords.

Over the past year, Israeli firms have forged a number of deals in the UAE.

In March, IAI said it would jointly develop an advanced drone defence system with the UAE's state-owned weapons maker EDGE.

Yossi Melamed, head of IAI’s Aviation Group, said the latest deal adds a "significant tier to the relations between Israel and the Gulf States" and that "additional agreements with companies in the region will arrive, and they will economically benefit all sides involved."

IAI already operates cargo conversion sites including an existing line at its headquarters at Ben Gurion International Airport near Tel Aviv.