(Yonhap Interview) KAI Sees Aircraft Sales Opportunities Amid Ukraine War

SEOUL, June 24 (Yonhap) — Korea Aerospace Industries Co. (KAI), South Korea’s only aircraft manufacturer, sees new opportunities for aircraft contracts from Eastern Europe and developing countries in the context of the ongoing war in Ukraine, said a company executive.

Demand for South Korean aircraft is on the rise, especially from countries that need to boost their self-defense capabilities or replenish depleted arms stocks following arms support to Ukraine.

“As instability increases in a specific region, countries that sense their own security vulnerabilities are poised to increase defense spending and purchase military assets like fighter jets to bolster their independent defense capabilities. “said Lee Bong-keun, vice president and general manager in charge of KAI. the International Affairs Division told Yonhap News Agency in a recent phone interview, in an apparent reference to the Russian invasion of Ukraine.

This year, many countries have expressed their interest in Korea’s aircraft, such as the T-50 advanced trainer and FA-50 light combat aircraft, to KAI through telephone, video conference and other channels, said the executive.

“Customers are looking for mature, proven and cost-effective aircraft. The FA-50 has outstanding merits (in terms of these aspects) as the South Korean Air Force has conducted a number of flights with the aircraft” , Lee said, adding dozens of the FA-50s have been exported.

The FA-50 can serve not only as an advanced training jet, but also as a light attacker with a few weapons on it and is offered at a modest price. That is why the Korean plane is preferred in developing countries.

The FA-50 is a hybrid version of a T-50 trainer aircraft for light combat purposes.

The T-50 series, including the FA-50, are “multi-role” aircraft because they help to significantly reduce the time and cost of transferring pilots to higher level fighter aircraft, such as the F16 and F35, the Korean airline said.

“Among other things, the T-50 series shares similar DNA with the F16 and F30 in terms of systems and operations, so it requires a significantly lower number of sorties (or flights) during aircraft transfers. planes,” Lee said.

The T-50 performed a pristine flight 20 decades ago, and the initially produced T-50s were deployed to the Korean Air Force from December 2005. KAI exported 60 T-50s, 12 FA- 50 and 84 KT-1 basic trainer aircraft. since 2011.

At the Dubai Airshow in November, KAI announced its goal of exporting more than 1,000 T-50 series units over the next 10 years, aided by growing demand for Korean aircraft.

KAI expects the “team deal” signed with Lockheed Martin earlier this month will help meet the sales target as the U.S. Navy and Air Force are expected to begin the process of call for tenders from 2024 to adopt around 500 training aircraft.

“We are confident (of winning the projects) because our aircraft have proven performance, operations and utilization rates. Above all, we will continue to reduce costs, improve performance, maintain stable operations to present capable aircraft at reasonable prices for the US military,” Lee said.

Any U.S. deal would be a game-changer in the market, paving the way for KAI and Lockheed Martin to win contracts in the global trainer and light attack aircraft markets, which are expected to reach more than 500 units, it said. -he declares.

The company is in talks with countries in Asia, Europe and the Middle East to export its planes, with deals in Central Europe and Africa showing progress, KAI said.

The brokers said the Russian-Ukrainian conflict has changed the defense products market landscape and KAI will see more export opportunities for its T-50 and FA-50 jets in the 2022-2024 period.

Asked about the latest developments in the competition to win Malaysia’s proposed fighter acquisition, Lee declined to elaborate on the deal, citing the sensitivity of the issue.

Daiwa Securities said the looming opportunity is in Malaysia, which will award its light combat aircraft project this year for the purchase of 18 units worth $1 billion.

“We believe that the Ukraine-Russia conflict will also open up ordering opportunities in new markets such as Eastern Europe and other emerging countries, as the region’s dependence on defense products made in Russia is likely to decline,” said Daiwa analyst Mike Oh. in a research note.

KAI recently signed an agreement to export 2 units of the FA-50 to Senegal, according to Daiwa. KAI declined to comment on the deal.

Its backlog is valued at 20 trillion won ($15 billion).

Shares of KAI jumped 55% to 50,400 won this year through Thursday, far outpacing the broader KOSPI’s 22% loss over the same period.

In the coming years, the company will focus on securing export contracts to prove the quality of its aircraft ahead of US projects.

“Our strategy is to develop ‘solutions’ to give our customers the best perception of our products while managing challenges such as supply chain disruptions amid COVID-19,” he said. .

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