Bloomberg News

Korea Aerospace to Participate in South Korea’s New Fighter Jet

February 12, 2014

KAI's T-50 Jets

The South Korean Air Force's Black Eagles perform maneuvers in the South Korean T-50 jets, developed by Korea Aerospace Industries Ltd. (KAI) with technical support from Lockheed Martin Corp., during an air display program at the Singapore Airshow. Photographer: Brent Lewin/Bloomberg

Korea Aerospace Industries Ltd. (047810), the country’s only planemaker, said it will participate in South Korea’s plan to build its own new fighter jet that will replace the older F-4s, F-5s and F-16s.

The Asian nation’s air force is expected to order about 100 aircraft, Chief Executive Officer Ha Sung Yong said in an interview in Singapore today. The government is looking for a foreign partner to collaborate on this project to provide some technical assistance, he said. The plane could take as short as eight years, depending on its size and specifications, he said.

Korea Aerospace and shareholder Samsung Techwin Co. have led efforts to create a domestic defense industry as South Korea seeks to pare reliance on Western countries. Asia’s fourth-biggest economy in December said it will extend its air-defense identification zone to cover islands and an underwater rock, adding to regional tensions escalated since China declared control over airspace claimed by neighbors.

Korea Aerospace plans to participate in a bid to become a risk-sharing partner for Boeing Co. (BA:US)’s 777X aircraft, Ha said.

It plans to submit a bid to participate in the manufacture of the fuselage and wings of the plane, he said. The company expects a request for participation for this to be sought later this month or early March, Ha said.

Korea Aerospace wants to get contracts to manufacture components to increase its volume, Ha said. The company has participated in such an arrangement with Airbus Group NV (AIR)’s A350 aircraft, he said.

Shares of Korea Aerospace fell 0.5 percent to 31,800 won as of 2:36 p.m. in Seoul trading. The stock has gained 10 percent this year, compared with a 3.7 percent decline in the benchmark Kospi Index.

Jet Orders

Korea Aerospace expects to win orders from the Philippines soon, Ha said without providing details. It also expects to win contracts from as many as two more countries this year -- one from Africa and another from South America, he said.

The company expects to win orders for T-50 trainer jets and FA-50 light combat jets, he said.

The FA-50, a light combat fighter based on the T-50 trainer jet, was developed together with Lockheed Martin Corp. (LMT:US) The plane is being delivered to the South Korean Air Force. The company has also developed the KUH-Surion helicopter with Eurocopter and it’s working on South Korea’s first heavy fighter.

Korea Aerospace agreed to sell 24 T-50 trainer jet to Iraq for more than $1.1 billion last year, the country’s biggest military export. That came after Indonesia ordered 16 of the aircraft in 2011.

The company aims to generate 80 percent of its revenue from selling aircraft, components and space businesses by 2020. That compares with 45 percent last year.

The company’s net income, including minority interest, rose 21 percent to 89.5 billion won in 2013. Sales rose 31 percent to 2.02 trillion won. In 2014, it expects sales of 2.3 trillion won, according to the company on Jan. 22. It aims to increase sales to 10 trillion won in 2020.

To contact the reporter on this story: Kyunghee Park in Singapore at kpark3@bloomberg.net

To contact the editor responsible for this story: Anand Krishnamoorthy at anandk@bloomberg.net


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