South Korea is holding off signing a memorandum of understanding (MoU) with Aero International (Regional) (AI(R)) on joining its planned regional-jet programme, until differences over final assembly can be settled.

The Korean Commercial-Aircraft Development Consortium (KCADC) had planned to sign an MoU with AI(R) on 14 March, following submission of its tender on workshare.

The Samsung-led team has since returned to South Korea and is not due to visit Toulouse again for several weeks.

Industry sources in Europe confirm that negotiations have been extended to allow time for a compromise to be found. Disagreement now centres on the KCADC's insistence on a "meaningful stake" in the programme, including a second AI(R) 70 assembly line in Korea.

AI(R) argues that twin assembly lines are not economically feasible and insists instead on the aircraft being built in Europe. One proposed compromise being discussed is making a possible second assembly line conditional on a demonstrable requirement for a larger number of aircraft, particularly from Asian carriers. One threshold figure being suggested is 50 or more airframes a year.

South Korea's demand for up to a 40% risk-and-revenue share of the AI(R) 70 is further complicated by Taiwan's competing bid for a similarly sized stake. Taiwan's Aerospace Industrial Development (AIDC), like the KCADC, wants to produce the aircraft's empennage and centre and aft fuselage sections (Flight International, 19-26 March, P8).

Rather than simply choosing between the two offers, AI(R) is working to accommodate both AIDC and the KCADC, and is understood to be signalling its flexibility on increasing foreign participation to 50%, or more. At the same time, Saab Aircraft is also now believed to be indicating its interest in taking a stake.

AI(R) has said that work will be awarded on the basis of cost, but as each of its three partners has already invested heavily in improving production efficiency, outside companies are facing tough targets for their bids to succeed.

It is being suggested that Italy's Alenia may be willing to concede to an Asian company its traditional hold over fuselage manufacturing, in return for assembly of the aircraft in Naples.

At the same time, Aerospatiale would be responsible for the flightdeck, while British Aerospace's Jetstream factory at Prestwick would get wing work.

AI(R) is hoping to be able to conclude detailed workshare negotiations in time to launch the regional jet at the Paris air show in June.

Source: Flight International