Korean Air to take stake in aerospace firm

Korean Air to take stake in aerospace firm

Korean Air announced Thursday that it will purchase more than 50 percent of the shares in Korea Aerospace Industries Ltd. The carrier said it plans to transform KAI into a leading aerospace player.

Korean Air signed a memorandum of understanding Wednesday with Daewoo Heavy Industries & Machinery, one of the three existing shareholders, to purchase its 33.33 percent stake in KAI. The transfer is expected to be completed within three months, with the purchasing price ranging from 102 billion Korean won ($87 million) to $111 million. In addition, Korean Air will buy all new shares issued by the aerospace company soon, so as to become the dominant shareholder by securing over 50 percent of shares.

KAI was created in October 1999 by Samsung Techwin, Hyundai Aerospace and Daewoo Heavy Industry. However, KAI has been unable to secure significant market presence, and investment duplications in the Korean aerospace industry have hampered the company's competitiveness in the international market.

As Korean Air becomes the dominant stockholder in KAI, it plans to streamline the company's operations and develop it as a key player in the Korean economy. The airline said KAI's transformation is critical to the revitalization of Korea's aerospace industry.

Korean Air said it has 25 years of experience and know-how in aircraft manufacturing. It has built and sold more than 500 small and mid-sized helicopters to the Korean military since 1976.

Korean Air Aerospace started manufacturing aircraft in 1986, and currently provides maintenance, product improvements and manufacturing, including fuselage and wingtips, for Boeing Co. and Airbus Industrie on the B747, B777, B737, A330 and A340, as well as the 500MD, UH-60, OH-58 and Lynx helicopters.