IAI signs contract to deliver expansion of Germany’s Arrow 3 procurement

Israel Aerospace Industries (IAI) has signed a contract with Israel’s Ministry of Defense (IMOD) valued at around USD 3.1 billion (EUR 2.65 billion) for the expansion of Germany’s procurement of the Arrow 3 air and missile defence system, the company announced on 11 January 2026.

The announcement follows the news on 17 December 2025 that the German Bundestag had approved an expansion of Germany’s Arrow 3 contract with Israel, which was originally signed in September 2023 and constituted the largest defence export deal in Israel’s history. The total value of the Arrow 3 contract is now expected to exceed USD 6.5 billion.

The first Arrow 3 batteries were deployed in Germany in early December 2025 at Holzdorf Air Base in the east of the country, although more locations are to come.

“This follow-on contract with Germany, expanding the procurement of the Arrow 3 system, represents another mega deal for Israel Aerospace Industries and for the State of Israel, reflecting the deep vote of confidence in IAI’s capabilities, in Israeli technology and the strategic partnership between our two countries,” IAI President and CEO Boaz Levy was quoted as saying in a company press release. “Delivering an advanced air missile defence system that has been tested and operationally proven, while meeting demanding timelines, significantly enhances Germany’s missile defence capabilities against evolving threats. This co-operation is based on shared values and a mutual commitment to protect civilian lives and serves as a foundation for the development of the next generation of air and missile defence systems.”

The Arrow 3 air and missile defence system was developed by IAI as the prime contractor for the system’s development and production in conjunction with the Israel Missile Defense Organization within the IMOD’s Directorate of Defense Research and Development (DDR&D) and the US Missile Defense Agency (MDA).

The Arrow 3 exo-atmospheric interceptor, which is part of the wider Arrow Weapon System (AWS), is designed to intercept and destroy the latest longer-range threats, especially those carrying weapons of mass destruction, and enable multiple upper-tier engagement opportunities.