Boeing expected to block IAI’s bid to convert 767 into aerial tankers

IAI has secured deals to sell its 767 tanker to Brazil and Colombia and is a threat to Boeing as it is able to offer a tanker to Israel at a much lower price

Sources told The Globes that Boeing will not grant permission to Israel Aerospace Industries (IAI) to convert the 767 into an aerial refueling tanker for the Israeli Air Force (IAF).

So far, IAI has secured deals to sell its 767 tanker to Brazil and Colombia and is a threat to Boeing as it is able to offer a tanker to Israel at a much lower price.

As we have recently reported Israel intends to buy the planes (along with new F-15s and CH-47s) from Boeing, in order to enable the deal being formulated to be financed from U.S. military aid. To this consideration is added the new limitation that will prevent Israel from converting a quarter of the aid to shekels, as it did in the past, in order to use it for procurement in Israel.

However a decision to buy the planes in the US will represent a blow to IAI and jeopardize the jobs of at least 500 employees. The matter is creating tension at IAI, that badly needs this order from the Ministry of Defense, as much as anything in order to preserve its know-how and consolidate its status in tanker aircraft, an area in which only Airbus, Boeing and IAI operate.

The restriction that Boeing is expected to place on IAI in the context of the bidding to supply tanker planes to the IAF is well known to the Israeli defense establishment. “This is a serious restriction, and regrettably, and there is genuine regret, IAI is ruled out of the process,” a defense source told Globes.

The source explained that any Boeing aircraft converted by IAI from passenger configuration to cargo or fuel tanker configuration must receive a special permit from Boeing, as the manufacturer and the owner of the intellectual property in the aircraft’s design. A source close to Boeing confirmed this statement to Globes, and added that in order to receive the required permits, for every Boeing aircraft that IAI converts to a different use it pays Boeing between $500,000 and $1 million. “How would it make business sense for Boeing to give IAI such a permit when it is bidding against it in the very same tender?” the source said.

The IAF is looking to replace its current tanker fleet which consists of Boeing 707s converted by IAI in the early 1980s.

Photo credit: Chris Lofting via Wikipedia and Christopher Okula / U.S. Air Force