Israeli defense company secures 'strategic' $1.2 billion deal with leading global aircraft engine manufacturer

A top Israeli aircraft manufacturer announced on Sunday that it had secured a business deal worth $1.2 billion with an unnamed “strategic customer."

Beit Shemesh Engines, which is listed on the Tel Aviv Stock Exchange, specializes in producing aircraft engine parts for both military and civilian markets. The company is headquartered in Beit Shemesh, a town west of Jerusalem.

Carmel Forgings, a subsidiary of Beit Shemesh Engines, reportedly signed the landmark deal with one of the world’s leading aircraft engine manufacturers. The agreement is set to span 15 years, with an option to extend it for an additional five years – potentially adding another $400 million to the contract’s value.

Ram Drori, manager of the FIMI Funds, a private equity firm that controls Beit Shemesh Engines, welcomed the largest business deal in the company’s history.

“This is the largest framework agreement in the history of the Beit Shemesh Engines Group and it strengthens its business and technological positioning in the parts-sector and constitutes a significant anchor to bolster its standing in the market as a strategic supplier,” Drori assessed.

He said the new contract will allow the defense company “to prepare optimally with the production means, infrastructure and resources required to maximize its operational efficiency for many years to come.”

The historic deal reportedly increases Beit Shemesh Engines’ framework agreements by 50%, from $2.1 billion to $3.3 billion. The company has rebounded since the COVID-19 pandemic and has benefited from rising defense sales driven by the ongoing wars in Ukraine and Gaza. However, it continues to face challenges amid growing global boycott calls against Israel since the Gaza War began.

In August, Norway’s $2 trillion sovereign wealth fund announced it would sell its 2% stake in Beit Shemesh Engines, citing the Norwegian government’s opposition to Israel’s military operations against Hamas in Gaza. The company is a key supplier to the Israeli Air Force. The fund’s decision to divest from Beit Shemesh Engines and other Israeli firms is also tied to Oslo’s opposition to businesses operating in or engaging with Jewish communities in Judea and Samaria, also known as the West Bank.

The Israeli defense industry has enjoyed steady growth despite a global backlash due to the Gaza War. In June, the defense industry broke its international sales record for the fourth consecutive year.

“Defense exports totaled nearly $14.8 billion last year, up from $13 billion in 2023 – the previous record high,” The Times of Israel reported, citing data published by the Defense Ministry’s International Defense Cooperation Directorate.

The Jerusalem Post noted that more than 50% of the sales went to European countries, many of which are frequently vocal in their criticism of Israel’s military operations against Hamas in Gaza.

“Over half of the defense export deals themselves broke the $100 million mark and over half of them were with European countries, though some countries in Europe have been among Israel’s loudest war critics.”