Ma'alot S&P Upgrades Aerospace Industry Rating to A- Amidst War Challenges in Gaza

In a surprising move, credit rating company Ma'alot S&P announced today that it is elevating the rating of the aerospace industry to A-, just six months after boosting it to BBB+. The company attributes this change to the aerospace industry's resilient operational performance, which remains robust despite the ongoing war and reserve mobilization.

The rating company, in an exclusive report, discloses details not yet made public by TA, likely to be featured in its upcoming fourth-quarter report. Notably, the aerospace company's order backlog, which hit a record $16.6 billion in September, now stands at an unprecedented $21 billion. This substantial figure represents four years of work for the company, bolstered by recent deals such as the $3.5 billion Arrow agreement with Germany and a $1.2 billion air defense systems deal with a foreign customer, reportedly Azerbaijan.

Ma'alot S&P reveals that since the onset of the Iron Swords War, the Ministry of Defense has accelerated payments to the aerospace company, settling a debt of approximately one billion shekels. Furthermore, the aerospace company is currently in advanced negotiations for several new substantial deals, including ones with the Ministry of Defense.

In its projections, Ma'alot S&P anticipates that the aerospace company will achieve sales of $5.25 billion by the end of 2024, $5.5 billion in 2024, and $5.8 billion in 2025, compared to $4.973 billion in 2022. The government-owned company, IAA, is expected to distribute dividends of $130 million this year, $145 million in 2024, and $160 million in 2025, providing welcome relief to the Treasury amidst war-related expenses.

Despite the positive outlook, Ma'alot S&P predicts that the aerospace company's public offering will not take place in the next two years, meaning the dividends will not immediately contribute to the state coffers.

In the ongoing war, the Israeli Defense Forces heavily rely on systems and armaments produced by the aerospace company, showcasing the operational use of the Arrow-3 missile, which successfully intercepted a Houthi-Iranian missile launched from Yemen to Eilat.

Eran Anchikovski, the Chief Financial Officer of the Aerospace Industry, commented on the rating upgrade, stating, "Raising the rating precisely in a period of economic uncertainty and volatility in various economic parameters, expresses the rating company's great confidence in the company's results." Anchikovski attributes the increase to the company's continuous momentum, improved business results, growth in profitability, deepened operational efficiency, strengthened cash flow, and a significant surge in order backlog, positioning the company for continued success.