Airbus wins EUR 1.5 bn South Korea helicopter deal

(SEOUL) - Airbus Helicopters Monday inked a deal worth 1.5 billion euros ($1.6 billion) to build more than 300 civil and military helicopters for South Korea in partnership with Korea Aerospace Industries (KAI).

The deal is part of a South Korean military project to replace its ageing fleet of McDonnell Douglas' 500MD light helicopters, which have been in service for decades, KAI officials said.

"This contract of exceptional size is for the development and construction of 214 military attack helicopters and around 100 civilian aircraft," said Norbert Ducrot, vice-president for Airbus Helicopters in northern Asia.

"The development and production contract is worth 1.5 billion euros to Airbus Helicopters over 20 years," he said.

The firm was in competition with Italian-British group AgustaWestland, and the deal gives Airbus Helicopters an important foothold in a strategically vital market.

The Korean company promised to disclose details within weeks when it signs a final contract with the Defence Acquisition Program Administration, a state agency controlled by the defence ministry.

"In cooperation with Airbus Helicopters, we hope to design a new light helicopter for military and commercial use," a KAI spokeswoman told AFP.

"It should be a completely new model," she said, adding the platform of Airbus Helicopters's EC-155B1 could be used as a prototype.

In 2005, Airbus Helicopters won a similar contract for transport choppers called "Surion", also in partnership with KAI. South Korea unveiled the first Surion helicopter in 2009.

KAI officials said the two deals with Airbus would help South Korea acquire independent technology and make inroads into the global helicopter market.

The South Korean market for civilian helicopters is seen as ripe for development and the country has "more than 700 helicopters in its military fleet that mainly consist of ageing American" machines that need updating, Ducrot said.

The first deliveries of civilian helicopters are expected in 2021, with the military aircraft due the following year.

Airbus estimates the global market for these classes of helicopters at around 600 aircraft "which could mean several billion euros for Airbus Helicopters over the next 20 years if you add support and maintenance services," said Ducrot.

South Korea has long favoured defence equipment from the United States, which has kept troops here since the 1950-53 Korean War to deter aggression by North Korea.

But European companies have made a number of bids for the South's military contracts.

Last month Airbus signed an agreement with Korean Air to jointly bid for an $8-billion military project to develop and produce 120 fighter jets of a new "indigenous" type.

The pair will compete with KAI, which has teamed up with US aerospace giant Lockheed Martin. The final winner will be announced in July.