Lockheed-backed firm top bidder for Korean fighter jets

Listen to this article

South Korea chose Korea Aerospace Industries Ltd., backed by Lockheed Martin Corp., as the preferred bidder for a $16.3 billion project to develop and manufacture the nation’s own fighter jets.

Bethesda-based Lockheed, the world’s largest defense company, will provide technical support if Korea Aerospace eventually gets to develop the aircraft, Kim Sung Pil, a public relations official at Korea Aerospace, said by telephone Monday. The new plane would replace South Korea’s aging F-4 and F-5 fighter jets, according to the country’s arms procurement office.

The announcement marks the latest step in South Korea’s decades-long effort to ease its dependence on costly U.S. arms for air defense against North Korea. It’s also another boost for Lockheed, which won a $7.8 billion tender in 2013 to provide South Korea with 40 F-35 fighters.

“South Korea needs 270 fresh aircraft, and building its own is more cost-effective than buying” from abroad, Kim Jong Dae, a former South Korean defense official who publishes the Defense 21+ security monthly, said by telephone. “South Korea’s own fighters would play supporting roles to the elite fleet of 40 F-35s.”

Shares of Korea Aerospace, the country’s only planemaker, closed up 2.69 percent at 53,400 won in Seoul trading. The stock has gained 34.2 percent this year, compared with a 6 percent rise in the benchmark Kospi Index.

Military aircraft have been the biggest single source of deficit for South Korea, whose economy is heavily dependent on exports, Kim Jong Dae said.

Korea Aerospace previously developed a light combat aircraft, the FA-50, which it has sold to the Philippines and Indonesia. That plane is based on the T-50 trainer jet Korea Aerospace developed together with Lockheed, which the two companies plan to market to the U.S. when the Air Force begins replacing its aging trainer fleet soon.

Korea Aerospace beat Korean Air Lines Co. in the competition for South Korean fighters, and now will negotiate with the government for the right to develop the fighters by 2025, the Defense Acquisition Program Administration said in an e-mailed statement. A contract will be signed within the first half of the year if the two sides can agree on price, conditions and technology, DAPA said.

“This decision was largely anticipated, because Korean Aerospace was seen as possessing more know-how in building aircraft,” Yang Uk, a senior researcher at Seoul’s Korea Defense and Security Forum, said by telephone.

The total $16.3 billion pricetag includes both development and manufacturing costs, Korea Aerospace said.

Lockheed is also trying to sell South Korea a missile- defense system to protect against the threat of North Korean nuclear attack. A group of ruling party lawmakers currently is pushing President Park Geun Hye to buy the system from Lockheed.