KAI Snags Big Deal

Airplane and parts maker wins bid to supply wing parts to A320 passenger jets until 2025 worth $600 million

Korea Aerospace Industries (KAI) has won the right in an open bidding held on Jan. 20 to supply the wing bottom panels for some 500 A320 passenger jets under a long-term contract until 2025, the company said Jan. 24.
The company said an official contract will be signed within the first quarter of this year and is worth some $600 million, taking up about 8 percent of the company's total annual sales goal and is the largest single contract to supply airplane parts for KAI.
KAI had to compete with airplane makers from such countries as Britain and India to clinch the deal. The company is confident that it will be able to supply more airplane parts to airplane makers around the world as its superb ability to produce various airplane parts and develop them, along with after service, have been widely publicized and thus it has improved its global competitive strength during the bidding process for the A320 wing bottom panels.
The Airbus Co. has been producing the wing parts for its own uses, but this time has decided to get the supply of the parts from the airplane parts supplier selected through a public bidding.
Airplane makers usually produce their own wing parts, as they are a key element in airplanes for safety and they require sophisticated technologies to produce them, especially the wing bottom panel which is some 16.3 meters long.
KAI plans to get as many subcontractors as possible to cooperate on the project in line with the government policy to have both large businesses and SMEs grow together, projecting that the project will create some 400 new jobs for the cooperative firms.
President Kim Hong-kyung said KAI is going through reorganization to strengthen its capacities to export complete airplanes and civilian airplane parts faster, which will upgrade the technological prowess of KAI and also improve the reputation of domestic airplane makers.
Around 200 airlines currently fly roughly 8,000 A320 passenger jets all over the world and KAI will be able to supply the wing bottom panels to Airbus until the production of the A320 is terminated.
KAI will have to import or develop new technologies to produce the wing bottom panels for Airbus including automation machines to mass produce the wing structure and parts, which will enhance the competitiveness of the Korean airplane industry globally, Kim said.
In consideration of risks involved and large-scale investments in the early stages of undertaking the project, KAI will take care of them alone, but will let subcontractors share the parts supply stage of the project, Kim said.
The CEO said KAI has been exporting T-50 supersonic jet trainers, the Surion and the KT-1, which KAI developed and produced under the government's defense industry development plans. KAI in particular has been strengthening the export business for its airplanes to civilian importers overseas. KAI plans to bring the share of the sector in its annual turnovers to 55 percent in 2020 from the current 40 percent.
KAI projects it will get military and civilian airplanes and parts export orders worth around 2 trillion won this year, double the figure of last year, with the backlog of orders amounting to 9 trillion won. The civilian sector orders alone should grow to 1 trillion won in 2015 and 1.5 trillion won in 2020 from 400 billion won in 2011. nw

An A320 passenger plane of Airbus is shown taking off. Korea Aerospace Industries(KAI) won a bid to supply the wing bottom panels for some 500 A320 planes worth $600 million on Jan. 24 until 2025, the largest single contract to supply airplane parts won by KAI so far in its history.