SEOUL: Airbus GroupNV and Korea Aerospace Industries Ltd. signed a contract to produce military and civil helicopters in South Korea, with the agreement potentially valued at $10 billion over a decade.
Korea Aerospace and the European aircraft maker intend to jointly build at least 300 helicopters, a spokeswoman for the South Korean company said.
The deal’s potential value of $10 billion over 10 years will be shared equally between Korea Aerospace, which will serve as the prime contractor, and Airbus Helicopters, a unit of the European group, according to a person familiar with the matter.
All the helicopters will be assembled in South Korea, said Airbus Helicopter Chief Executive Guillaume Faury.
The partnership “has very important strategic relevance” and tightens a decade-long partnership between the companies, Mr. Faury said in an interview. He added that Airbus and Korea Aerospace currently are developing a utility helicopter, the KUH-1 Surion.
South Korea has been working to develop the country’s next-generation light civilian and military helicopters for several years and considered alliances with U.S. and other European rotorcraft makers.
The deal would include co-production of at least 200 armed military choppers and 100 civilian-use helicopters. Both designs are based on the EC155 helicopter.
The project is aimed in part at replacing South Korea’s aging fleet of 500MD and AH-1S Cobra military helicopters. U.S. manufacturers have historically been the dominant helicopter suppliers to the South Korean military, but Mr. Faury said he expects South Korea to become more reliant on machines built by the Korea Aerospace partnership with Airbus.
Korea Aerospace said it would sign a supply contract with South Korea’s Defense Acquisition Program Administration later this month. The first civil helicopter is due to be delivered in 2020, with the armed version to follow a year later.
The government in July picked the South Korean aircraft maker to develop advanced light helicopters. The company has held exclusive talks with Airbus, which outbid contenders such as Bell Helicopter, a unit of U.S. conglomerate Textron Inc.
Korea Aerospace has said it aims to produce and sell a total of 1,000 units of the next-generation light helicopter, including 600 for export. It didn’t provide a time frame.
The contract opens what Airbus hopes will be a busy year for military-helicopter contracts. With sales of civil helicopters to the lucrative oil and natural-gas sector hurt by falling crude prices, the company is betting on military deals this year.
Poland is due to select a supplier for 70 troop-transport helicopters soon, and Mr. Faury said talks continue with Qatar to complete terms for the purchase of 22 NH90 choppers. Japan also intends to buy a new utility helicopter.