IAI and the Arrow That Paid Off

Israel's state-owned aerospace champion posted the best year in its history — $7.4 billion in sales, record profit, a backlog past $30 billion — on the back of the Arrow system that defended Israeli skies against Iran. Now the government is finally moving to take it public.

Israel Aerospace Industries closed 2025 with the best results in its seventy-three-year history: sales of $7.4 billion, up roughly 20% on the year, and net profit of $712 million — an all-time record, up 45%. Its order backlog crossed $30 billion for the first time, about 71% of it from customers outside Israel and equal to roughly four years of work. The engine of the year was the same system that defended Israeli skies through three rounds of fighting with Iran: the Arrow.

The company the state keeps

IAI is the part of the Israeli defense economy that is not for sale. Founded in 1953 by Al Schwimmer and Shimon Peres, it is a state-owned enterprise headquartered beside Ben Gurion Airport in Lod, employing more than 15,000 people across missiles, space, radar, unmanned systems, and aircraft conversion. Where Elbit is the prime a foreign investor can own outright, IAI is the one the government has held for seventy years — because it builds the systems a state does not outsource.

The Arrow

Developed with the United States and Boeing, Arrow 3 sits at the top of Israel's multi-tier missile defense stack and was central to the country's defense during the exchanges with Iran in April and October 2024, intercepting ballistic threats in combat for the first time. IAI is already developing Arrow 4 and Arrow 5. Two Arrow 3 deals with Germany over the past three years total nearly $7 billion — the largest defense-export agreements in Israeli history.

Beyond the interceptor

The Arrow gets the headlines, but IAI is a full-spectrum aerospace house. Its ELTA subsidiary builds the radars — including the Green Pine that cues the Arrow. It makes the Heron family of long-endurance drones, the Ofek reconnaissance satellites and the launchers that put them in orbit, the Barak air-defense family, and runs Bedek, one of the larger commercial-aircraft maintenance and passenger-to-freighter conversion operations outside the United States.

The IPO question

CEO Boaz Levy has called an initial public offering "essential" for both the company and the state, and a minority IPO is now moving forward after years of delay. A company with $30 billion in backlog, more than $700 million in annual profit, and a strong balance sheet carries untapped value as a wholly state-owned entity. A minority listing would rank among the largest IPOs in Israeli history and would, for the first time, put a market price on the company that builds the Arrow.

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