(Bloomberg) -- Israel Aerospace Industries is proceeding with a plan to establish a presence in Abu Dhabi, where it will convert Emirates aircraft into freighters, highlighting how the United Arab Emirates remains committed to building ties with Israel even as tensions rise in the region.
The aviation arm of IAI, which provides maintenance repair and overhaul services for aircraft, is set to reconfigure 10 Boeing Co. 777s from Emirates’ fleet into cargo freighters at two hangars starting in October, Shmuel Kuzi, the executive vice president of the division, said in an interview.
The Israeli company had signed a deal with the airline to convert four aircraft in 2021, which at the time marked one of the first outcomes for aviation companies from the normalization of relations between the UAE and Israel.
Relationships between Israel and several nations across the Middle East have been strained since October, when the Israel-Hamas war erupted in Gaza. Turkey halted trade with the state, while US-led efforts to get Saudi Arabia and Israel to formally recognize each other have stalled. The UAE, meanwhile, has pledged to stick with its decision to recognize Israel, though it has frequently criticized the country for continuing its war in Gaza and has called for a cease-fire.
“The situation is very, very sensitive,” said Kuzi, referring to talks with airlines and leasing companies that are current or future customers. “Aviation is always influenced by the political issues, but today I’m able to say that hangars are full.”
State-owned IAI said it’s seeing increasing demand from lessors and airlines for freighters that have been converted from passenger aircraft amid limited slots from planemakers Airbus SE and Boeing for new planes.
Emirates’ cargo arm saw an increase in carried goods in 2023, and the business made up 11% of the Dubai-based airline’s total revenue. The carrier placed a $1 billion firm order for five Boeing freighters in July to meet growing demand.
IAI is seeking to get clearance on the overhauled aircraft from the US Federal Aviation Administration in the coming month, Kuzi said. IAI will start the process from conversion sites that include locations in South Korea, the US, and the one at Etihad Airways Engineering facility in Abu Dhabi.
“It is not the end of the story, because we always look forward to open in other places since the demand is huge and we need to supply this demand,” said Kuzi.
(Corrects spelling in headline)
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