Merlin and IAI Partner on AI Autonomy for Cargo Freighters

Merlin, Inc. and Israel Aerospace Industries (IAI) have signed a Memorandum of Understanding (MoU) to integrate AI-powered autonomous flight systems into large commercial cargo aircraft. The agreement, announced on July 23, 2026, targets the integration of Merlin’s autonomy technology into IAI’s passenger-to-freighter conversion programs.

The partnership aims to lay the groundwork for civil certification and commercial deployment of autonomous flight technologies within the global air cargo network. According to a press release issued by Merlin, the collaboration will focus on the company’s “Condor” product family, an autonomy system designed specifically for large, multi-crew Part 25 aircraft.

Integrating autonomy into freighter conversions

IAI operates a major passenger-to-freighter conversion business. The Israeli aerospace manufacturer holds the Federal Aviation Administration (FAA) supplemental type certificate for the first Boeing 777-300ERSF freighter conversion and is actively developing a conversion program for the Airbus A330-300.

By partnering with IAI, Merlin intends to embed its certifiable autonomy architecture directly into these heavy-lift cargo platforms. Merlin Chief Executive Officer Matt George noted that IAI’s expertise in aircraft certification, advanced avionics, and freighter conversions makes the manufacturer a critical partner for the Condor program.

“Merlin’s collaborations with IAI and World Star Aviation reflect growing industry recognition that AI-powered autonomy can enhance safety, improve operational efficiency, and help operators scale existing fleets to meet increasing demand,” George stated.

The MoU follows Merlin’s May 14, 2026, introduction of the Condor product family. At that time, the Boston-based company outlined its strategy to bring aircraft-agnostic AI autonomy to commercial transport, beginning with the cargo sector through a relationship with aircraft lessor World Star Aviation.

Strategic positioning and financial context

The agreement aligns with broader growth initiatives for both companies. IAI reported $7.4 billion in revenue and $712 million in profit last year, maintaining a current order backlog of $29 billion. The state-owned aerospace company is currently preparing for an Initial Public Offering (IPO) on the Tel Aviv Stock Exchange, with a potential dual-listing on the Nasdaq, targeting an estimated valuation between $25 billion and $30 billion.

Merlin brings its own established defense contracts to the commercial partnership. The company holds an indefinite-delivery/indefinite-quantity (IDIQ) contract with the United States Special Operations Command (USSOCOM) for a C-130J autonomy program, which carries a total ceiling value exceeding $100 million.

IAI Chairman of the Board Boaz Levy highlighted the strategic nature of the agreement, noting that autonomy will play an increasingly important role in the years ahead.

“Our collaboration with Merlin reflects a shared commitment to advancing next-generation capabilities that can enhance safety, efficiency, and operational flexibility across the aviation industry,” Levy said.

AirPro News analysis

We view this MoU as a significant step in the maturation of autonomous flight technology from experimental defense applications to commercial Part 25 operations. While the agreement remains non-binding and specific initial platform selections are pending future phases, aligning with an established conversion house like IAI provides Merlin with a realistic pathway to FAA certification.

The cargo sector has long been identified as the logical entry point for large-scale autonomous operations. By targeting passenger-to-freighter conversions rather than clean-sheet aircraft designs, Merlin and IAI can leverage proven airframes like the Boeing 777-300ERSF and Airbus A330-300. This approach mitigates the aerodynamic and structural certification risks, allowing regulators to focus primarily on the autonomy systems and human-machine interface.

Sources: Merlin, Inc.