KAI, Lockheed to join forces for US megaproject

Korea Aerospace Industries Ltd. (KAI), South Korea’s aerospace manufacturer, has agreed to join forces with Lockheed Martin Corp. to enter the race for a US megaproject to buy about 500 jet trainers, KAI said on Sunday.

The US government is seeking to purchase 280 units of fighter jets for the Air Force and 220 units of both advanced jet trainers and tactical trainers for the Navy between 2024 and 2025.

To improve the odds of winning the project for the lead-in fighter trainer, both KAI and Lockheed signed a teaming agreement on June 9 to strengthen their strategic partnership.

The value of the upcoming tender was not immediately known.

Shares in KAI rallied to a five-year high briefly in the morning, in a positive response to the news about its partnership with Lockheed to jointly bid for the US military procurement project.

Their partnership will focus on improving the performance of the TA-50 fighter jet, a light attack variant of the T-50 and making it more cost-effective in an aim to be selected by the US Armed Forces. They hope that these efforts, alongside the jet's flying speed, armament systems and safety features, will place it well above the rival models.

The T-50 is an advanced jet trainer co-developed by KAI and Lockheed in a 2 trillion won ($1.6 billion) project between 1997 and 2006.

In the joint bid for the US military procurement project, the two companies will cooperate in designing, manufacturing and improving the fuselage design of the TA-50, as well as building and expanding their production facilities, KAI said.

The teaming agreement was signed by KAI Chief Executive Ahn Hyun-ho and Lockheed Executive Vice President Gregory Ulmer.

The TA-50 is the first light combat aircraft developed by South Korea, based on the T-50 model. The jet trainer is equipped with air-to-air and air-to-ground missiles, in addition to precision-guided munitions such as joint direct attack munitions and smart fragment weapons to perform tactics education and training for battlefield operations.

It flies at the speed of up to Mach 1.5, while the top 10 fastest fighter jets in the world are capable of speeds over Mach 2.0.

The T-50 has sold more than 200 units in five countries, including South Korea. To enter the markets in Europe and the Middle East, KAI is working on extending its flying range and enhancing its armament systems.

If the consortium wins the US order, it will secure a workload for at least the next 20 years and become the world’s largest supplier of jet trainers and light combat aircraft.

Additionally, both companies will team up to increase the global market share of KAI's jet trainers and light combat aircraft.

Their alliance is expected to help KAI reach a goal of exporting more than 1,000 units of the T-50 jet as agreed with the South Korean government in November of last year.  

Shares in KAI rose as high as 60,000 won in morning trade, its strongest intra-day point since July 14, 2017.

The state-run Export-Import Bank of Korea is KAI's largest shareholder with a 26.41% stake as of end-March.

Write to Kyung-Min Kang at Kkm1026@hankyung.com
Yeonhee Kim edited this article.