By Steven Scheer
JERUSALEM (Reuters) -Israel Aerospace Industries (IAI) said on Wednesday it signed an agreement with Etihad Engineering to establish a facility in Abu Dhabi that will convert Boeing (NYSE:BA) 777-300ER passenger planes into cargo aircraft.
The new facility, which will operate as the company's maintenance centre in Abu Dhabi, aims to meet the growing demand for large cargo jets.
"Not only do we see the demand, but we view it as a greener, more profitable, highly innovative solution for our airline customers, and an excellent way to drive value for our business," Tony Douglas, chief executive of Etihad Aviation Group, said in a statement.
Demand for cargo plane conversions has been on the rise with the increase in ecommerce and the decline in value of used planes during the COVID-19 pandemic.
State-owned IAI currently converts Boeing 737, 747 and 767 passenger aircraft for cargo use. It has said it is currently developing a conversion method for the Boeing 777 and expects to finish the licensing process in 2023.
The deal comes a year after Israel and the United Arab Emirates agreed to normalise relations under the U.S.-sponsored Abraham Accords.
Over the past year, Israeli firms have forged a number of deals in the UAE.
In March, IAI said it would jointly develop an advanced drone defence system with the UAE's state-owned weapons maker EDGE.
Yossi Melamed, head of IAI’s Aviation Group, said the latest deal adds a "significant tier to the relations between Israel and the Gulf States" and that "additional agreements with companies in the region will arrive, and they will economically benefit all sides involved."
IAI already operates cargo conversion sites including an existing line at its headquarters at Ben Gurion International Airport near Tel Aviv.
Etihad Engineering is one of the largest commercial aircraft maintenance, repair and overhaul (MRO) services providers in the Middle East, and the centre in Abu Dhabi will be the largest and most advanced in the Middle East, IAI said.
It noted the facility will be certified by the UAE Civil Aviation Authority, the U.S. Federal Aviation Administration, and the European Aviation Safety Agency.