South Korea Selects Korea Aerospace Industries, Lockheed Martin For $7.84B Fighter Jet Deal

South Korea on Monday selected Korea Aerospace Industries (KAI) and its U.S- based partner Lockheed Martin for a multi-billion dollar project to manufacture a series of indigenous fighter jets. The 8.67 trillion won ($7.84 billion) worth project called Korean Fighter Experimental or KF-X is aimed at replacing the country’s decade-old fleet of F-4s and F-5s jets.

The bid from KAI and the U.S. aerospace giant is, however, subject to a screening process before it can be officially approved, according to Agence France-Presse.

Nearly 120 jets are scheduled to be developed by 2025 as part of the deal, which is one of South Korea's most ambitious weapons development programs. The production cost is expected to be at another 9.3 trillion won, Yonhap, South Korea’s official news agency reported. Experts said, according to Yonhap, that KAI had an advantage over Korean Air Lines as it had also manufactured T-50 Golden Eagle supersonic trainer and the country's utility helicopter, the Surion. Korean Air Lines had partnered with Airbus to make the rival bid.

"After reviewing their development plan, ability and bid price by the evaluation team comprised of government officials and experts, we've selected KAI as the preferred bidder," the Defense Acquisition Program Administration (DAPA) said in a statement, according to Yonhap, adding: "We will make a final selection after completing negotiations on details to launch the project in the first half of this year."

Sixty-percent of the project's funding will come from Seoul, while Indonesia will pitch in about 20 percent, according to a deal signed earlier on the joint development and production, the Wall Street Journal reported. The remainder will come from KAI and its technology supporter Lockheed Martin.

“This decision was largely anticipated, because Korean Aerospace was seen as possessing more know-how in building aircraft,” Yang Uk, a senior researcher at Seoul’s Korea Defense and Security Forum, said, according to Bloomberg. Lockheed is also trying to sell a missile defense system to South Korea amid nuclear attack threats from Pyongyang.

It is not reportedly clear if Lockheed will benefit financially from the future sales of the planes. A KAI spokeswoman said that talks were still in progress, the Journal reported.

In recent years, South Korea has signed a number of billion-dollar deals to modernize its weaponry. Earlier this month, KAI and Airbus had signed a $10 billion deal to produce military and civilian helicopters in the country.