Jun Ji-hye, a reporter at the finance desk of The Korea Times, focuses primarily on economic policy and government agencies, mainly covering the Ministry of Finance and Economy, the Ministry of Budget and Planning, the National Tax Service and the Korea Customs Service. She previously covered financial authorities, including the Financial Services Commission and the Financial Supervisory Service, and earlier worked on the political, city and business desks, reporting on a wide range of issues.
Korean Air, Airbus at loggerheads on fighter program
By Jun Ji-hye
Korean Air and its partner Airbus Defence and Space appear to be having difficulties drawing up a joint bid for an $8 billion fighter program, according to industry sources, Sunday.
“Airbus D&S is not overly enthusiastic about its participation in the project,” an informed industry source told The Korea Times. “Airbus would sign a memorandum of understanding (MOU), but one thing for sure is that the company believes it is just a guest for this project, not a host.”
The two companies failed to participate in the first tender for the project, with a schism between the two as the likely reason for the delay.
The two previously reached a verbal agreement for joint participation on the project, in which the European firm would provide technical support.
Other sources pointed out that Korean Air has sidelined Airbus on occasions over key decisions in the bidding process. The two are close partners in the non-military market, Korean Air being a key buyer of Airbus passenger jets; however, “Airbus is not happy,” the source said.
The flag carrier previously confirmed that the two sides were scheduled to sign an MOU at the earliest possible date.
However, the signing has yet to take place, resulting in the failure of Korean Air to make a bid for the ROK Air Force’s homegrown fighter program, codenamed KF-X, by the deadline on Feb. 9.
According to the Defense Acquisition Program Administration (DAPA), Korea Aerospace Industries (KAI), which teamed up with U.S. aerospace giant Lockheed Martin, was the sole bidder for the project.
At least two bidders are needed for the auction to be valid, so a second was scheduled with a deadline of Feb. 24.
Korean Air has refused to comment about the relationship between the two companies, saying, “There is nothing to confirm.”
Another source said, “Korean Air suggested having a partnership with Airbus first, and the latter had no particular reason to reject the offer as both Korean Air and KAI are important customers.”
He added that Airbus and Lockheed Martin are only in a position to offer technical cooperation. The main parties of the KF-X project are domestic firms, so it is not a competition between Airbus and Lockheed Martin, he said.
The project will spend 8.5 trillion won ($7.95 billion) to develop indigenous F-16 plus class fighter jets, which are scheduled for service from 2025, to replace aging F-4 and F-5 jets.
Observers expect that the team of Korean Air and Airbus are expected to place their bid in the second auction, because in a third bid, in accordance with the law, the arms procurement agency can push forward with the project even if there is a sole applicant.
After closing the bid on Feb. 24, the DAPA plans to pick a preferred bidder by next month, and conduct negotiations until May, before deciding a winner by the end of the first half of the year.
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