The new facility will operate as the Israeli company's maintenance center in Abu Dhabi.
"Not only do we see the demand, but we view it as a greener, more profitable, highly innovative solution for our airline customers, and an excellent way to drive value for our business," Tony Douglas, chief executive of Etihad Aviation Group, said in a statement.
Demand for cargo plane conversions surged after the Covid-19 pandemic with the increase in global e-commerce.
IAI currently converts Boeing 737, 747, and 767 passenger aircraft for cargo use. The company is also working on a conversion method for the Boeing 777s and expects to finish the licensing process by the end of 2023.
State-owned IAI already operates cargo conversion sites including an existing line at its headquarters at Ben Gurion International Airport near Tel Aviv.
Etihad Engineering is one of the largest MRO services providers in the Middle East, and the center in Abu Dhabi will be the largest and most advanced in the Middle East, IAI said.
