T-50 for $25 million, cheap or expensive?

Indonesia buys $400M of Korean jets

May 26, 2011
Korea yesterday signed a massive deal with Indonesia to export T-50 trainer jets, the first sale abroad of the country’s supersonic aircraft.

Korea Aerospace Industries agreed with Indonesia’s Defense Ministry to sell 16 T-50 Golden Eagle jets in the $400 million deal. The aircraft will be delivered by the end of 2013, according to the agreement.

Indonesia has been looking to replace its aged fleet of training jets, and Jakarta short-listed the T-50s last year with two other jets from Russia and the Czech Republic. After Korea’s state-run aerospace company was selected as the preferred bidder on April 12, 20 KAI officials in charge of exports have stayed in Indonesia to negotiate the specifics. After 50 days of talks, Indonesia decided on the Korean jets.

The T-50s were jointly developed with U.S.-based Lockheed Martin in a 13-year project that cost 2 trillion won ($1.8 billion).

Yesterday’s deal is seen as a doorway for Korea to export the aircraft to other buyers such as the United States, Israel and Poland. The Lee Myung-bak administration has long strived to make the planes an export industry, but its main obstacle was the jet’s expensive sticker price, roughly $25 million.

A high-profile Indonesian delegation visited Korea in February to discuss defense cooperation, but the trip was marred by an embarrassing break-in at a hotel room of a member of the delegation by Korean agents of some sort. While Seoul denies it, accusations were made that the National Intelligence Service was behind the break-in.

“The successful deal with Indonesia proves the tireless efforts and cooperation among Korea’s government, military and civilian industry,” the Korea Aerospace Industries said. “With this sale, a green light is turned on for Korean arms exports.”

“I am thrilled to conclude the deal ahead of the company’s initial public offering,” said Kim Hong-kyung, president of Korea Aerospace Industries.

Recent media reports said Korea’s jets are in a final round of bidding for a deal with Israel.

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