20 Percent Increase In Net Profit for 2001; Israel Aircraft Industries Earns Net Profit of $101 Million in 2001 Compared to $84 Million in 2000.

Business Editors

FIDAE 2002

BEN-GURION INTERNATIONAL AIRPORT, Israel--(BUSINESS WIRE)--March 18, 2002

Israel Aircraft Industries' (IAI) net profit in 2001 reached a record high of $101 million, as compared to $84 million in 2000, an increase of 20 percent.

These figures include a capital gain of $28 million from the sale of Galaxy Aerospace, IAI's business jet subsidiary, to Gulfstream. Mr. Moshe Keret, President and CEO of Israel Aircraft Industries, reported the results to the company's Board of Directors. The Board chaired by Gen. (res.) Ori Orr, reviewed and approved the results of the 2001 financial statements in its March meeting.

In 2001, IAI signed new contracts worth $2.88 billion, as compared to $2.6 billion in 2000, an increase of 11 percent. Backlog for the end of 2001, reached a record high of $3.8 billion.

Company sales in 2001 were $2.09 billion, as compared to $2.19 billion in 2000, a decrease of 4.5 percent.

Exports in 2001 were approximately $1.60 billion, as compared to $1.69 billion in 2000, a decrease of 5 percent.

IAI's financial figures also include the financial figures of Elta Electronics Ltd., a wholly owned subsidiary of IAI. Elta's net profit (before tax) in 2001 reached $14.8 million, as compared to $23.8 million in 2000, a decrease of 38 percent.

Elta's sales for 2001 reached $386 million, as compared to $460 million in 2000, a decrease of 16 percent.

Elta's exports in 2001 reached approximately $320 million, as compared to $388 million in 2000, a decrease of 18 percent.

In 2001, Elta signed new contracts worth $365 million, as compared to $500 million in 2000.

Ori Orr, Chairman of the Board said, "2001 was a difficult year, in which IAI had to act in a harsh business environment that made it difficult for the company to continue its momentum of growth it enjoyed in the last several years. The company achieved new records in net profit, in new orders and its backlog, in spite of these rough market conditions."

During his presentation to the Board of Directors, Mr. Keret said, "In the year 2001, IAI dealt successfully with the slowdown in commercial aviation. Company's sales to the civilian market accounted for 38 percent of its turnover, and despite the market's weakness, IAI's sales in this field decreased only slightly. We also achieved a net profit that crossed the $100 million line for the first time."

Mr. Keret added, "We continue to carry out our intensive project of improving the ability to compete and to provide our customers with the best service available. This way we will be able to continue to provide our customers with products and services that fully meet their expectations in a rapidly developing competitive business environment."

In his remarks on IAI' 2001 financial statements, Dr. Abraham Knobel, Vice President Finance, said, "during 2001, IAI continued to reinforce the company's financial structure. Equity level reached $351 million (19 percent of assets) as a result of profit accumulated in the last years. IAI continued to reduce its outstanding debt to the banks, which came down to its lowest level in the last decade. These figures prove IAI's strength, for both today and the future."

The Chairman of the Board of Directors, Mr. Ori Orr and the Directors approved IAI's financial results and complimented the President & CEO, Mr. Moshe Keret, IAI's management and employees for their remarkable achievements for the year 2001, despite hardships in the business environment, both in Israel and abroad.