KAI to launch aircraft maintenance company

Korea Aerospace Industries is establishing the country’s first maintenance, repair and overhaul (MRO) company for commercial aircrafts jointly with seven partners.

According to KAI on Wednesday, a total of eight companies including Korea Airport Corporation, BNK Financial Group and low cost carriers Jeju Air and Eastar Jet signed an agreement to found a corporation dedicated to offering MRO services for commercial jets.

The companies agreed to inject a total of 135 billion won into founding the new corporation. By investing 88.5 billion won, KAI is the largest shareholder with a 65.5 percent share followed by Korea Airport Corporation, which holds a 19.9 percent share.

While only a basic agreement was signed Wednesday, the corporation will officially be founded in July and begin operations from as early as the end of this year after obtaining an Approved Maintenance Organization certificate from the Ministry of Land, Infrastructure and Transport.

Korean airlines have been dependent on foreign MRO companies as there were no Korean companies specializing in the business. Outsourcing the work cost a “substantial amount of capital outflow from Korea,” according to the company, as the airlines spend about 1 trillion won for their aircraft maintenance.

With the new corporation, KAI aims to absorb the MRO demand from local airlines especially LCCs that have been aggressively expanding their fleet in response to heavy competition in the market. The MRO business is one of the key areas that the company will rely on for future growth.

BY KIM JEE-HEE [kim.jeehee@joongang.co.kr]