Korea-Spain aircraft deal shrouded in mystery

A400M Airbus transport aircraft

By Lee Min-hyung

Wang Jung-hong, head of DAPA

The defense procurement agency's reported plan to sign a military aircraft swap deal with Spain is drawing attention here, as it would mark the first time for a Korean manufacturer to export trainer jets to Europe.

Under the plan, Korea is expected to sell 30 KT-1 basic trainer jets and 20 T-50 advanced trainer jets, manufactured by Korea Aerospace Industries (KAI), to Spain. The European country also reportedly plans to sell four to six A400M Airbus transport planes to Korea as part of the aircraft exchange deal.

The reported contract, if signed, raises hopes for Korea and KAI to tap deeper into Europe and raise its global profile in the defense industry. The deal is estimated to be worth 2 trillion won ($1.77 billion).

But Korea's Defense Acquisition Program Administration (DAPA) denied the reported plan, saying "no discussion is underway" between Seoul and Madrid over the aircraft swap deal.

"Spanish military and government authorities have yet to contact us via official routes over the deal," an official from DAPA said Sunday. After reports over the possible swap deal surfaced in recent weeks, the defense procurement agency has contacted Spain to confirm whether the country is considering the deal, but the Spanish government denied the rumor, according to the official.

The rumor came as a Spanish defense ministry reportedly plans to sell to other countries 13 of 27 A400M planes it has ordered from Airbus.

Ranking defense officials from Korea and Spain will meet next week in the latter's capital city for a joint defense committee meeting.

For this reason, media attention has been on whether both sides will have any in-depth discussion on the reported aircraft deal. But DAPA denied the possibility that either side will bring it to the dialogue table during the meeting.

"The possible swap deal is not on the dialogue agenda for the meeting," the DAPA official said. "As there have been no official proposals from the Spanish authority, the issue will not be discussed at all."

Last week, local reports said a Spanish defense official delivered the country's interest in signing the swap deal in a meeting with a Korean official on the sidelines of the Farnborough International Airshow in the U.K. in July. Some reports claimed Korea has not responded to the offer.

But DAPA said it conducted an internal fact-checking process over the report, and nothing has been confirmed over whether the Spanish authority has contacted the Korean defense procurement agency over the swap deal.

DAPA is in a position that the possible aircraft exchange contract is a win-win deal for both sides and it will welcome the reported contract if Spain delivers an official proposal.

KAI is also willing to sign the big deal with Spain, as the company has recently failed to win a U.S. jet contract. In September, the U.S. Air Force awarded a $9.2 billion Advanced Pilot Training (APT) contract to a Boeing-led consortium.

At that time, a consortium of Lockheed Martin and KAI failed to compete against the low-price strategy from the Boeing consortium.

KAI was desperate to win the bid, as the APT project was cited as a golden opportunity for the Korean company to raise its global brand image. On top of that, KAI believed the project would pave the way for the company to sign more mega contracts in the U.S. and other overseas markets.

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