European Jet Maker Likely to Backtrack on $1 bil. Pledge

09 Februari 2012

A European consortium of four aerospace and defense companies will likely walk away from its promise of investing 20 percent of the cost for a Korea-initiated project to develop a new multirole fighter, industry sources said Thursday.

The European Aeronautic Defense and Space Company N.V. (EADS) reportedly made the pledge as Korea hinted that financial and technology contributions would favorably affect the separate selection of a foreign vender to supply 60 advanced fighter jets to Korea for 8.29 trillion won ($7.3 billion).

According to a 2011 report by Korea National Defense University, EADS expressed its intent to invest up to 20 percent or $1 billion into the KF-X program, a fighter development program.

An industry insider also confirmed that EADS had expressed it was willing to contribute as much as 20 percent of the development cost for the KF-X project to officials of the Defense Acquisition Program Administration (DAPA).

“EADS’s position was that it was willing to comply with DAPA’s request for KF-X investment, but it was deemed too early to comment on the possible import of KF-X fighters from European countries,” said the source familiar with EADS’s talks with DAPA over the FX-III project.

“But now EADS will likely backtrack on the pledge as DAPA made it clear that no incentive will be given in the FX-III race to a company committed to share the financial burden of the KF-X project.”

Seoul has pursued the ambitious KF-X project since 2000 in a bid to replace its aging F-4 and F-5 fighter jets with indigenous aircraft with stealth capabilities and export potential by 2020.

Jakarta has been jointly conducting a feasibility study on the project while shouldering 20 percent of the $50 million initial costs.

Thirty-five Indonesian researchers have teamed up with 137 Korean experts for the exploratory stage, scheduled for completion with the selection of a prototype at the end of 2012.

Indonesia has pledged to invest $1 billion in the KF-X project and buy 50 KF-X fighters, but no other country has yet to follow suit.

Turkey is reportedly mulling joining the Korea-led consortium for the KF-X project, but on condition of an equal partnership with Korea.

A senior DAPA official said Seoul has rejected Ankara’s demand to allow it to have a 50 percent stake in the KF-X project along with Korea as it believes Seoul should play a dominant role.
He said DAPA could abandon the risky jet development project unless another country or a foreign company join the project and share between 20 percent and 29 percent of the development costs.

Meanwhile, an industrial source raised suspicion that Korea may have decided not to give an incentive to FX-III bidders with willingness to invest in the KF-X project as American defense companies, which he claims DAPA favors, showed no interest in making financial contributions.

EADS is competing with two U.S. defense giants, Lockheed Martin and Boeing, in the FX-III project, for which Korea is expected to announce the winner in October this year.

(Korea Times)