August 06, 2005, AVI KRAWITZ (The Jerusalem Post)

Haifa-based defense electronics company Elbit Systems Ltd. has won a major portion of a 700 million contract from the UK Ministry of Defense, as part of a joint venture led by British defense contractor Thales UK , the company said Thursday.

Elbit said that its share of the contract is valued at approximately 300m., with the majority being executed by the Leicester-based Thales.

The agreement covers the development, manufacture and initial support phases of the "Watchkeeper" program, with the aim of extending Britain 's use of unmanned air vehicles (UAV's). The program will deliver equipment, training and facilities, to be deployed by the forces from 2010.

"We are proud to take part in one of the most prestigious UAV programs in the world," said Joseph Ackerman, President and CEO of Elbit Systems. "Thales's teaming with Elbit Systems testifies to our advanced technological system's capabilities and substantiates our positioning as one of the leaders in the UAV market".

The UK chose Thales as the preferred bidder for Watchkeeper in July 2004, beating a rival group led by Northrop Grumman Corp. and BAE Systems Plc. Other partners in its consortium are Boeing Co. and the UK state-controlled Qinetiq Plc defense research company.

The Watchkeeper program is designed to provide the UK armed forces with intelligence, surveillance, target acquisition and reconnaissance (ISTAR) capabilities based on the UAV system, Hermes 450. It will supply the forces with all weather day and night surveillance in times of war, tension or during peace-keeping operations without the need to deploy troops into sensitive areas or harmful situations.

"The Watchkeeper system can provide continuous 24/7 surveillance when needed, using unmanned air vehicles able to stay airborne for more than 16 hours each." Elbit said in a statement.

Elbit was not available for comment due to a quiet period before it releases its second quarter earnings on Tuesday. Its shares rose 2.3 percent to $23.9 during morning trade on the Nasdaq Securities Exchange and closed 1.14% higher at NIS 106.6 in Tel Aviv.