Aeronautics Defense Systems said it is about to start deliveries of 50 Orbiter mini-drones to the Finnish army as part of a $30 million contract signed 18 months ago.
The Israeli company will deliver 150 more Orbiters to Finland's military later in the year, turning around a recent financial crisis that resulted in former Elbit executive Amos Natan being brought in to replace Aeronautics founder Avi Leumi as chief executive officer.
"We're working very hard and 2013 was a very good year for us, in which we resumed growth," said Natan, who was previously chief executive of Elbit Systems' artillery unit Soltam.
"I believe that with all the problems and challenges facing the defense market now because of budget cuts we'll see further growth this year thanks to deal that we'll announce."
In a recent analysis, the international business consultancy Frost & Sullivan tagged Israel as the world's leading UAV exporter, with aerial drones worth more than $4.6 billion sold between 2005 and 2012.
Israel's drone sales account for 10 percent of its military exports, a key source of revenue for the Jewish state. The peak year was 2005 when the Israelis racked up $1.4 billion in UAV and systems exports.
The overall total averages $580 million a year for the aircraft themselves, along with their command-and-control vehicles, operating systems and various payloads. That did not include a $100 million deal for state-owned Israel Aerospace Industries, a major UAV manufacturer, to upgrade India's Heron drones.
India is a major buyer of Israeli military systems and operates 60 IAI Herons acquired in several deals worth $1 billion. And it wants more of the craft that can stay aloft for 40 hours at 30,000 feet and carry a formidable array of sensors.
Frost & Sullivan forecast Israeli drone exports will grow by 5 percent to 10 percent through 2020, in part by exploiting U.S. curbs on American drone sales to foreign countries because most of their systems, which are used by the Central Intelligence Agency and the military, remain classified.
IAI Chief Executive Officer Joseph Weiss observed in the years ahead armies around the world will be gradually expanding their drone inventories, taking over operations currently conducted by manned aircraft.
"It's hard for me to assess at the moment what our next UAV platform will look like, but the upcoming innovations will mainly be in the area of payloads which the platforms can carry," he said.
IAI and Elbit in particular have focused on developing payloads for long-range intelligence-gathering, marine operations, real-time surveillance of targets and electronic warfare. Some Israeli drones can carry several payloads simultaneously.
Elbit Systems, and its subsidiary Elisra, say it's developed a hyperspectral payload for spotting and identifying hazardous materials for the Hermes 900, the advanced variant of their workhorse Hermes 450.
The 900 has a maximum altitude of 30,000 feet, can operate in extreme weather conditions and carry a wide range of payloads. It uses the same command and control infrastructure as the 450.
In addition to IAI, Elbit Systems and Aeronautics Systems, other key Israeli companies involved in drone development and production include Bluebird Aero Systems and Gilat Satellite Networks.
The Israeli air force's biggest and most advanced UAV is the Heron TP, known as the Eitan, Hebrew for "strong." It's built by state-owned IAI, the defense industry flagship.
IAI says the 4 1/2-ton craft with a range of 700 miles and flight endurance of up to 45 hours is designed primarily for long-flight, high-altitude electronic surveillance missions. It has a wingspan of 86 feet, as big as a Boeing 737's.
The Israeli business daily Globes reports the Defense Ministry has tasked Israel's defense industry to match its mastery of UAV technology by developing unmanned submarines.
Defense analyst Yuval Azulai observed: "If the industry moves quickly and purposefully in identifying this emerging market and offers a well-functioning unmanned submarine, it could be riding the right wave a decade from now in a market that will be worth $2 billion a year by 2020."