By Jun Ji-hye
Korean Air, the nation’s top air carrier, plans to sign a partnership agreement with Europe’s Airbus Defence and Space to jointly participate in Seoul’s indigenous fighter development project, according to the airline, Thursday.
“The two companies reached a verbal agreement earlier this week,” a press officer of the air carrier told The Korea Times. “They plan to sign a memorandum of understanding soon with a view to placing a formal bid next Monday.”
The latest agreement made the bidding a neck and neck race as Korea Aerospace Industries (KAI), together with its partner, the U.S. aerospace giant Lockheed Martin, are also bidding for the project.
Under the project, codenamed KF-X, the government plans to spend 8.5 trillion won ($7.95 billion) to develop indigenous F-16 class fighter jets, which are scheduled for service from 2025, to replace aging F-4 and F-5 jets.
Bidders are supposed to submit their proposals by Monday.
“After Korea Air and KAI submit proposals, the Defense Acquisition Program Administration (DAPA) will review them and pick a preferred bidder by next month,” said a DAPA official on the condition of anonymity. “Negotiations with the preferred bidder will take place until May. Then, DAPA would decide a winner by the first half of the year.”
The proposals should include project plans along with technical transfers from TAC (technical assistance company).
The official noted, “With the participation of the European company as TAC for Korea Air, the bidding procedure is looking like a game of chicken as the two sides are expected to engage in cutthroat competition.”
Korean Air prepared for the KF-X project by forming a task force last year. Experts have noted that technical cooperation with an advanced foreign company would be essential for the air carrier to compete against KAI, which already has experience in developing T-50 supersonic trainers.
In particular, Airbus has the merits of a comparatively easy technical transfer, given that European countries have less strict rules to control this compared to the U.S., which would hinder KAI’s partner Lockheed Martin.
A number of experts said, however, that KAI seemed to have the upper hand in the bidding thus far.
The state-run company is planning to considerably increase personnel in charge of research.
“We can meet the deadline and cost of the jet development,” said KAI President and Chief Executive Ha Sung-yong during a meeting with reporters at the end of last month.
Boeing was once thought to be in partnership with Korean Air for the KF-X project, but it reportedly turned down its plan to concentrate more on another contract to supply the ROK Air Force with four in-flight refueling tankers.
Follow Jun Ji-hye on Twitter @TheKopJihye
Hello, I am Jun Ji-hye, a reporter at The Korea Times. I primarily cover financial authorities and write articles on a wide range of topics related to finance and capital markets. If you have any information to share, feel free to email me at jjh@koreatimes.co.kr, and I will review it carefully. I am committed to always doing my best to communicate with readers through high-quality articles.