Kellstrom Industries, Euralair and Israel Aircraft Industries Form Strategic Alliance

Euralair Selects Solair as Exclusive Supplier to Support Fleet of 737-800 Aircraft

Kellstrom Industries, Inc. announced that its Solair division, Euralair Industries, and Israel Aircraft Industries ("IAI") established a Strategic Alliance ("Alliance") to provide complete and comprehensive "Total Support" packages to all Boeing 737 operators in Europe.

The Alliance, combining the strengths of all three parties, will offer airframe maintenance including C and D Checks, components maintenance, including APU, landing gear wheels and brakes, and supply chain management including material and logistics management, purchasing services, inventory lease, exchange and loan, warehousing and warranty administration. The Alliance will operate jointly out of Euralair's state-of-the-art facilities in Le Bourget, Paris.

The Alliance will market its combined capabilities and services, utilizing the collective sales and marketing teams of the three organizations with the goal of tailoring a customized support package based upon each customer's unique requirements.

As part of the Alliance, the parties signed a five-year agreement whereby Solair will be the exclusive supplier of the material requirements for Euralair. Some highlights of this exclusive agreement include:

• Solair will assume all the purchasing activities of rotables, expendables and components for Euralair;

• Solair will provide aircraft on ground (AOG) services on a 24 hour, 365 days per year basis; and

• IAI's Bedek Division will perform repair and maintenance of Euralair International's fleet.

David Arzi, Corporate VP of IAI and General Manager of Bedek Aviation, said, "This cooperation is a continuous demonstration of our commitment to total maintenance solutions. The alliance complements IAI's existing joint venture with General Electric Company, aimed at providing total support for airframes, engines and components for most Boeing and Airbus aircraft. Our customers will benefit from turnkey services which add substantial value to our quality repair and overhaul capability."

Zivi R. Nedivi, President & CEO of Kellstrom, added, "As we reinforce and strengthen our cooperation with quality organizations like IAI and Euralair on the maintenance front, we are continuing our previously announced talks with several potential joint venture partners for our aircraft and aircraft engine portfolio. Although we would have liked to have a transaction completed by year-end, we feel that the opportunities that present themselves during the negotiations are worth the extra effort and time expended. We are encouraged with the level of progress that has been made to date as we look forward to concluding the structuring process with the partner of our choice."