The Korea Herald


KAI aims to win 7.7 tln won in orders in 2014

By 박형기

Published : Jan. 22, 2014 - 21:26

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Korea Aerospace Industries, the country's sole aircraft manufacturer, said Wednesday that it aims to secure 7.7 trillion won ($7.2 billion) worth of new orders and push up sales to 2.3 trillion won in 2014 as part of its ongoing effort to become a global player in the aerospace field.

In a press conference held in Seoul, KAI said this year's target order represents a 25 percent increase from the year before, while the sales goal marks a 15 percent on-year gain.

It wants to push up annual sales to 10 trillion won by 2020 and become the 15th largest aerospace company in the world.

Speaking at the gathering, the company's president Ha Sung-yong said 2014 promises to be a critical year for future growth.

"Every effort will be made to move forward with the KFX next generation fighter project, development of light helicopters and the winning of the U.S. Air Force T-X project," the executive said, adding that the company wants to make headway in increasing sales of KT-1 basic trainers, T-50 jets and KUH utility helicopters as well as win various maintenance and space rocket programs.

The CEO said that KAI signed a memorandum of understanding with JAL Engineering Co. to see if it can handle maintenance, repair and overhaul services for the Japanese flag carrier.

He hinted this could be extended to offer MRO services to South Korea budget carriers that currently send planes to Singapore for repairs. The company said the business, if fully launched, could generate revenue worth 1-2 trillion won.

He pointed out that while South Korea's aerospace market is small at present, it has incredible growth potential in both civilian and military fields.

"The size of the global aerospace market in 2011 was tallied at $460 billion, which is much larger than the world's semiconductor and shipbuilding markets," Ha said, and analysts are forecasting an annual average growth of 5.6 percent in the coming years so the market will hit 750 billion in 2020.

Seoul recently announced it wants to build South Korea's aerospace industry from a $2.7 billion business in 2011 to a $20 billion business and raise the global market share from 0.5 percent to 3 percent.

The KAI president explained that while operating profits contracted by around 5 billion won from the year before to 121.6 billion won in 2013, numbers should jump 30 percent to around 160 billion won in the new year.

"The dip last year is due to money that went into preparation for the production of civilian airplane parts for such companies like Airbus," he said.

On the impact of the aerospace industry on the economy, the CEO said the development of the KFX project alone including spin-offs and research and development is worth 100 trillion won and can help hire 280,000 people. The project can result in some 250 planes being built for South Korea that will initially replace F-4, F-5 and eventually F-16 fighters in its Air Force inventory. If exports are included, the total can reach up to 600.

He said that if the present pace of the company's growth is reached, KAI would be able to handle the costs. Of the 6-8 trillion won needed for the KFX project, the South Korean government will foot up to 70 percent, with KAI picking up 10 percent and Indonesia providing over 10 percent.

Related to the T-X project, the company's chief executive said winning the contract could result in 15 trillion won in economic benefits that will help hire 80,000 people."If this project is secured, it can lead to more orders from U.S. allies," he said. He pointed out that there are some 3,500 advanced jet trainers that needs replacing.

Ha emphasized that while South Korea has become an economic powerhouse by expanding its industrial base, it is time to look at more value added sectors and industries.

"In the past, making ships and computer chips played a role, but in the future, aerospace will play a leading role," he said. (Yonhap News)