Carrier chooses to use US manufacturer's programme instead of pursuing Bedek option

Korean Air's (KAL) Aerospace division has secured a major boost to its business with a deal that will see 19 Boeing 747-400 passenger aircraft converted into Special Freighters (SF) at its Gimhae plant.

The airline has signed a deal with Boeing to be the modification provider for the US manufacturer's 747-400SF conversion on 19 aircraft. It covers nine of its own aircraft, plus commitments from Boeing for 10 to be converted by KAL Aerospace for other airlines.

KAL will have a total of 10 747-400s converted for its own operation, but work on the first aircraft will be performed at another centre, likely to be Taikoo (Xiamen) Aircraft Engineering (TAECO) in China.

The airline says its commitment to have 10 of its own passenger aircraft converted is in line with a plan to have its cargo unit only operating 747-400 production freighters or SFs by 2009.

It says conversion work will be carried out between 2006 and 2012, adding that the deal "will gradually serve as a stepping stone for Korean Air to advance into the world's freighter-conversion market".

KAL Aerospace is now the third known conversion centre for Boeing's 747-400SF programme. The others are TAECO in China and Singapore Airlines subsidiary SIA Engineering in Singapore.

The South Korean carrier's deal with Boeing represents a setback for Israel Aircraft Industries unit Bedek Aviation, which had launched its own 747-400 passenger-to-freighter conversion programme last year, ahead of Boeing. A senior KAL executive said late last year that a conversion contract was likely to go to Bedek rather than Boeing because the Israeli company's financial offer was superior (Flight International, 28 October-3 November 2003).

Bedek general manager David Arzi is playing down the loss of the KAL deal, saying that the airline preferred the Israeli proposal, but the airline's chairman decided to sign with Boeing "as part of an offset deal that will include the purchase of new aircraft, including 777s, from Boeing".

Arzi adds that losing the Korean deal will not impede the programme: "This is a solid programme backed by financial partners from the Far East, and our forecast is still to convert 100 747-400s in 15 years."

He adds that Bedek has a launch customer that has a contract for two conversions, and the "programme is on track and a first aircraft will be delivered in October 2005".

In January, Hong Kong's Cathay Pacific Airways was named launch customer for Boeing's programme with an agreement to have up to 12 passenger aircraft converted into freighters, the first of which will be completed in December 2005.

That agreement covers six firm conversions and six options, with some of the work to be done at TAECO, which is part owned by Boeing and Cathay.

In May, SIA Engineering said it would also be a Boeing SF conversion centre, starting with a deal to modify four ex-SIA 747-400s for Hong Kong's Dragonair.

Japan's Nippon Cargo Airlines has also signed a contract with Boeing for up to eight conversions.



Source: Flight International