IAI signs $1b air defense deal with Israels Defense Ministry

Israel Aerospace Industries (IAI) last week announced that it had signed an agreement to sell air defense systems to Israel’s Ministry of Defense in a classified deal worth $1 billion.

Within Israel’s multi-layered air defense system, the two upper layers of defense rely on IAI systems: Arrow 3, which operates outside the atmosphere, and Arrow 2, which intercepts ballistic missiles inside the atmosphere.

Arrow 3 was developed in cooperation between Israel Ministry of Defense’s Homa Missile Defense Administration, the US Missile Defense Agency (MDA), and IAI, which serves as the prime contractor for the development and production of the system. During the war which began October 7, 2023, Arrow 3 became the first-ever system in the world to perform operational interception of a missile outside the atmosphere, when it intercepted a missile launched from Yemen by the Houthis.

Another IAI system integrated into Israel’s air defense system is the Barak MX system, which is installed on the Navy’s Saar 6 ships. The system’s LRAD interceptor, known in the Navy as the Barak Magen, is designed to protect strategic assets at sea, primarily Israel’s gas rigs, and supports various radars and launchers for cover against fighter jets, helicopters, UAVs, cruise missiles, surface-to-air missiles, and surface-to-surface missiles.

The system has been sold in recent years to a number of countries, including Azerbaijan, in deals worth about $1.2 billion. It includes an advanced control center and integrates several types of interceptors for different ranges. The Barak MRAD interceptor is designed for a short range of up to 35 kilometers and includes a single pulse engine; The Barak LRAD interceptor is designed for a medium range of up to 70 kilometers and includes a bi-pulse engine; while the Barak ER interceptor is designed for a long range of up to 150 kilometers, through the addition of a rocket booster and upgrading of radar and communications capabilities. All rocket engines of the interceptor family are manufactured by government company Tomer, which is a central body of knowledge in the field of rocket propulsion in Israel. IAI also presented a significant improvement in profit: net profit increased by about 34% to about $220 million, compared with about $164 million in the corresponding quarter last year. IAI’s cash balances and liquid assets amounted to approximately $4.8 billion at the end of the quarter.

Published by Globes, Israel business news – en.globes.co.il – on May 24, 2026.

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