Eurofighter maker offers to invest $2 billion

EADS's Eurofighter

By Kang Seung-woo

The European Aeronautic Defense and Space Company (EADS) offered Thursday to invest $2 billion (2.24 trillion won) in Korea’s indigenous fighter plane program, if its Eurofighter Tranche 3 is selected as a replacement for Air Force’s aging fleet of F-4s and F-5s.

The multi-national defense firm is bidding against U.S. Lockheed Martin and Boeing to secure the 8.3 trillion-won contract for the FX III project.

Lockheed Martin is hoping to sell its F-35 Joint Strike Fighter (JSF) and Boeing is touting its F-15 Silent Eagle. An announcement is due in late June.

In addition, EADS, which jointly worked with the Korea Aerospace Industries (KAI) in the production of Korea’s first indigenous helicopter, Surion, said it will build a maintenance repair and overhaul (MRO) facility and an aerospace software center as well as provide marketing support for Korean-made combat aircraft.

Last month, the four-nation consortium, led by Cassidian Spain, also came up with a proposal to manufacture 53 out of 60 planes in local factories if it wins the contract.

“If Eurofighter wins the deal and puts into action what it promised, Korea’s aerospace industry will see a huge economic impact,” EADS said in a statement, citing that about 10,000 jobs were created when four European nations manufactured the Eurofighter. Some 400 small- and medium-sized firms were involved and EADS expects a similar effect in Korea that could create up to 50,000 jobs.

The offer comes at a time when the Eurofighter and Boeing’s F-15 continue to be favorable choices, while the early favorite the F-35 had to battle technical hiccups earlier this year.

In February, the cockpit of an F-35 filled mysteriously with smoke and a week later, the Department of Defense grounded all 51 of its fifth-generation stealth aircraft after a crack was discovered in an engine blade during a routine inspection.

Despite the offer of a “sweet deal,” it is not likely to boost the Eurofighter’s chances in the bidding war because the offset proposal is not the only persuasive factor.

The Defense Acquisition Program Administration (DAPA) is in price negotiations with each bidder after having finished considering offset programs.

The defense procurement office is doubtful of the offer.

“EADS made the investment offer on the condition that it wins the procurement deal,” DAPA spokesman Baek Youn-hyeong said.

“In addition, the 2 trillion-won offer is optional, not included with evaluation items such as offset programs or industrial cooperation.”

The fighter jet project, which was originally scheduled to be finalized in October last year, was delayed because critics pointed out there was not enough time to choose a supplier to meet requirements within the time frame.

DAPA initially planned to bring in aircraft from December 2016 until 2020, but the last year’s delay pushed the timeline for completion back to 2021.