Aero International (Regional)'s planned AI(R) JET 70 regional-aircraft development has been given a boost, with South Korea signing a preliminary agreement to join the programme, angling for a stake of up to 40%.

The Korean Commercial-Aircraft Development Corporation (KCADC) and a team from AI(R), headed by chief executive Patrick Gavin, signed a memorandum of understanding (MoU) at the end of a week of renewed discussions in Seoul. "The MoU defines the principles that could lead to a significant partnership agreement," says AI(R).

KCADC is the first of several potential partners to commit to the programme, with CASA, Saab and Taiwan's Aerospace Industrial Development Centre also showing interest. International support is viewed as critical to winning backing from AI(R)'s three partner companies, Aerospatiale, Alenia and British Aerospace, which have yet to approve the business plan to develop the 58- to 84-seat family.

"The MoU allows AI(R) to play the Korean card - it gives them a boost in selling this programme to their own shareholders," says a local industry source. Within the AI(R) membership there is known to be some reluctance to commit to the estimated $1.2 billion cost of developing a new regional twinjet.

KCADC, led by Daewoo, Korean Air and Samsung, will now begin detailed negotiations with AI(R) on the size of South Korea's investment and stake in the programme, its production workshare and programme responsibilities. It is hoped to reach an agreement in time for the Paris air show.

Local sources say that KCADC wants up to a 40% stake in the programme, to produce the entire fuselage from nose to tail and be fully involved in programme management and after-sales support. The 14-member consortium is also expressing interest in bidding for other subsystem work, such as the landing-gear, hydraulic and environmental-control systems.

An AI(R) source says, however that interest from other potential stakeholders is such that the Ìnal stake held by KCADC is likely to be nearer to 20-25%.

AI(R) officials emphasise that the MoU makes no mention of percentage shareholding or workshare, all of which has still be negotiated. They add that there are other potential partners to accommodate, some of which are close to signing MoUs with AI(R).

In the meantime, KCADC's membership has reached broad agreement on the establishment of a replacement organisation. Unlike KCADC, the new Korea Aerospace Industries (KAI) consortium would take full responsibility for programme management, marketing and foreign joint-venture liaison.

It is planned to register KAI in June, with capital of 100 billion won ($112 million). Its overall shareholding has to be finalised, but is likely to give Daewoo, Korean Air and Samsung each 20%, with Hyundai taking 10% and the Government the rest.

Source: Flight International