Bloomberg News

EADS Fights to Keep Typhoon in South Korean Combat Jet Contest

August 19, 2013

European Aeronautic, Defence & Space Co. (EAD) is working to keep alive the Eurofighter Typhoon’s sales prospects in South Korea after the agency set to select the provider of 60 combat planes raised questions about the bid.

South Korea’s DAPA defense armaments agency requested a draft contract over the weekend as EADS sought to clarify its proposal that had “confused” the customer, said Christian Scherer, the sales chief of EADS’s Cassidian defense unit.

South Korea is also evaluating offers from Boeing Co. (BA:US), which is trying to sell an upgraded version of the F-15E called the Silent Eagle, and the F-35 Joint Strike Fighter made by Lockheed Martin Corp. (LMT:US) The country, already a buyer of F-15s, is looking to acquire 60 jets under the so called F-X program.

“We have all to play for,” Scherer said in a telephone interview late yesterday. “I am still optimistic that whoever is uncomfortable with how we structured our bid will come around and see there is more to it.”

DAPA said on Aug. 18 one of three contestants it refused to identify did not meet conditions specified for the contract. South Korean’s Yonhap News reported on Aug. 19 that EADS did not meet the requirements, while the Lockheed Martin F-35 offer did not meet the government’s strict budget cap.

“The F-X source selection process has multiple phases and we will continue to work closely with the U.S. government as they offer the F-35 to Korea,” Lockheed Martin said in an e-mailed statement. “Lockheed Martin has not to date received an official notification from the Republic of Korea regarding the results of the price bidding for the F-X Program.”

Traditional Buyer

South Korea reopened the fighter bids on Aug. 13 after temporarily halting the process in July because all three competitors exceeded the 8.3 trillion won ($7.5 billion) budget.

Boeing has not received any official notification and “we await word on the next steps in the selection process and will continue to work closely with the Republic of Korea in meeting their defense requirements,” the Chicago-based company said by e-mail.

EADS, which is leading the South Korean bid for the Eurofighter joint venture that also includes BAE Systems Plc (BA/) and Finmeccanica SpA (FNC), was fully compliant with the country’s rules, Scherer said. The package provided by Eurofighter would help Korea to come to the most cost-effective choice for the F-X program, he said.

The fight for military exports is intensifying as defense companies from Lockheed Martin, the world’s largest, to EADS seek sales abroad to make up for shrinking prospects in their home markets. Eurofighter lost out to the F-35 in a competition in Japan and last year came short in India, which opted for the Dassault Aviation SA (AM) Rafale.

South Korea has traditionally procured most of its military equipment from the U.S., which has stationed almost 30,000 troops on the peninsula to aid in the country’s national defense. That reality drove EADS to make an aggressive proposal, Scherer said.

EADS said its offer includes about $2 billion in investments into a future indigenous South Korean fighter development, the KF-X. The company also had offered to assemble 53 of the 60 planes in South Korea, Scherer said.

To contact the reporter on this story: Robert Wall in London at rwall6@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net


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Companies Mentioned

  • BA
    (Boeing Co/The)
    • $134.78 USD
    • -0.03
    • -0.02%
  • LMT
    (Lockheed Martin Corp)
    • $189.15 USD
    • 0.48
    • 0.25%
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