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June 18, 2024

KAI CEO denies sellout rumor

PUBLISHED : March 19, 2023 - 09:05

UPDATED : March 19, 2023 - 09:05

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Kang Goo-young, CEO of Korea Aerospace Industries, speaks at a press conference held at the Air Force Hotel in Seoul on Friday. (Korea Aerospace Industries)

Korea Aerospace Industries will spend 4.5 trillion won ($3.5 billion) in research and development to achieve a quantum jump in the global aerospace industry, according to its CEO on Friday.

“In the aerospace industry, you cannot survive if you are not looking ahead 40 to 50 years from now. From the perspective of a CEO, (spending money on) research and development drags down (short-term) performance because it cuts down revenue. But if we don’t (invest in R&D) now, KAI will not have continuous growth in the next few decades,” said Kang Goo-young, CEO of KAI, in a press conference held at the Air Force Hotel in Seoul.

KAI logged 2.8 trillion won in revenue in 2022 with an operating profit of 141.6 billion won.

The CEO said KAI fell about four to five years behind its competitors because it did not carry out long-term investments in future aerospace sectors, explaining that the company has to act now despite the difficulties. In January, KAI laid out the goal of reaching 40 trillion won in yearly revenue in 2050 to become the top seven aerospace company in the world.

Kang pointed out that the company has already begun the process of developing the next-generation aerospace businesses: 6th generation fighter jets, eco-friendly cargo flights, high-performance helicopters, advanced air vehicles, smaller orbits and space solutions.

Already having secured two key export orders of FA-50 light fighter jets worth almost $4 billion from Poland and Malaysia since September last year, KAI has set the target of posting 3.8 trillion won in revenue for this year, which would be a 35.7 percent increase on year.

“The most important targets for this year are Egypt and the UAE. I’m aware that we will expect to hear some good news from the UAE. The order from Egypt, which will begin with 36 (fighter jets), could be expanded to 100. So we will focus on getting the designation of a preferred bidding country this summer,” said Kang.

The CEO also emphasized the importance of the US market as he vowed to go all-in to win orders there starting next year. According to him, the contract could be between 400 and 600 fighter jets that could be worth over 100 trillion won with follow-up deals including maintenance, repair and training.

Asked about the potential of the company being sold by the government as the state-run Export-Import Bank of Korea is the biggest shareholder of KAI with a 26.41 percent stake, Kang dismissed the rumor.

“I won’t deny that there is demand. But I feel that the government will let KAI do its things as it is doing well for now. Another factor is national security. The essence of national security is the power of aerospace and KAI is in charge of 50 percent of Korea’s aerospace power. Would national security be maintained if such aerospace power is handed over to a private company?” he said.

By Kan Hyeong-woo (hwkan@heraldcorp.com)

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