Korean Air to Take Part in the Management of Korea Aerospace Industries

Korean Air is to purchase over 50% of shares in KAI (Korea Aerospace Industries LTD.) with the intention of transforming it into a leading aerospace player.

Korean Air signed an MOU yesterday with Daewoo Heavy Industries & Machinery, one of the three existing shareholders, to purchase its 33.33% stake in KAI. The transfer is expected to be completed within three months, with the purchasing prices ranging from 102 billion KRW to 130 billion KRW. In addition, Korean Air will buy all new shares issued by KAI in the near future, so as to become the dominant shareholder by securing over 50% 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 KAI's competitiveness in the international market.

As Korean Air becomes the dominant stock holder in KAI, it will streamline the company's operations and will develop it as one of the key players in the Korean economy. KAI's transformation is seen as critical to the revitalization of the Korea’s aerospace industry.

With 25 years of experience and know how in aircraft manufacturing, Korean Air is a leader in the aerospace industry, having manufactured and sold more than 500 small and mid-sized helicopters, including the 500MD and UH-60, 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 The Boeing Company and Airbus Industrie on the B747, B777, B737, A330 and A340, as well as the 500MD, UH-60, OH-58 and Lynx helicopters. In 1989, Korean Air co-produced the 520MK light helicopters with McDonnell Douglas Helicopter Corporations.