FA-50 sale to Philippines closer to completion

FA-50

By Kang Seung-woo

Philippine President Benigno Aquino has approved a payment plan to acquire 12 Korea Aerospace Industries (KAI) FA-50 light combat aircraft, a local media outlet said, Friday.

The nation’s lone airplane manufacturer also confirmed the report.

KAI has teamed up with the Defense Acquisition Program Administration (DAPA) and Korea Trade-Investment Promotion Agency (KOTRA) to sell the aircraft through a government-to-government program, estimated at $420 million (451 billion won).

According to the report by the Star, the Philippines’ defense department is seeking to complete negotiations with KAI within the week.

“We have sights on finalizing the contract by the end of March,” said a KAI official.

He added that its staff is currently in negotiations with the Philippine side to complete the deal.

The defense department has been allowed to make an advance payment of 15 percent of the total contract price to KAI, which initially wanted a 52 percent down payment to cover manufacturing costs, the report said.

“The government would deliver payment upon completion of certain ‘milestones’ or progress related to the construction of the jets,” it reported.

Both sides also agreed to the turnaround time for the jets’ parts at 60 days under a two-year warranty.

Although a final contract was expected within last year after the Manila government signed a memorandum of understanding, the decision was delayed after Typhoon Haiyan struck the Southeast Asian country in November.

The FA-50 is a variant of the T-50 Golden Eagle supersonic trainer that was co-developed with U.S. aerospace giant Lockheed Martin, which was designed to replace F-5 class aircraft operated by the Korean Air Force.

In December, KAI signed a contract for a $1.1 billion deal to export 24 FA-50s to Iraq, the most lucrative defense export deal by local players.

The company is also seeking to export T-50 family jets to Peru, Chile and Botswana, while eyeing the U.S. Air Force’s T-38 replacement program this year ― a plan to purchase 350 new aircraft worth billions of dollars.