Boeing 787 Supplier Korea Aerospace Hires Share-Sale Arrangers

Korea Aerospace Industries Ltd., the maker of tail parts for Boeing Co.’s 787 Dreamliner, hired arrangers for an initial public offering as it seeks funds to help boost overseas sales.

Woori Investment & Securities Co. and Hyundai Securities Co. will manage the Korea Exchange IPO, which is due to take place by June 2011, Korea Aerospace said in an e-mailed statement today. The company, which also makes military training jets and parts for Airbus SAS, didn’t say whether any existing stockholders would sell shares.

Korea Aerospace plans to raise exports to more than 60 percent of sales by 2020, it said, as it expands its commercial- aerospace business, including possible plans for a 90-seat regional jet. The company and Korean Air Lines Co.’s aerospace unit have also benefited from Boeing’s decision to contract out production of more parts for planes including the 787.

Work on the Dreamliner may help Korea Aerospace boost commercial aerospace exports, including parts, to about 700 billion won ($613 million) by as soon as 2015 from a target of 400 billion won this year, Bae Chan Hui, a director at Korea Aerospace, said yesterday during a tour of the company’s factories in Sacheon, South Korea.

Korea Finance Corp., which owns 30 percent of Korea Aerospace, said last month it plans to sell a controlling stake in the aerospace company after the IPO. Hyundai Motor Co., Samsung Techwin Co. and a Doosan Group-backed fund each own stakes of about 20 percent.

787 Production

Korea Aerospace and Korean Air intend to raise production of 787 components to enough for 10 planes a month over the next three to four years to support Boeing’s plans, Bae of Korea Aerospace and Park Ji Won, Korean Air’s general manager, said yesterday. Korea Aerospace currently makes parts for five aircraft a month, while wingtip-maker Korean Air supplies enough components for two planes each month.

Boeing, based in Chicago, has said it expects to deliver the first 787s in the middle of the first quarter of 2011, after delaying the date last month for a sixth time.

Korean Air expects 787 parts to account for about 30 percent of its aerospace workload over the next five years, Kim Se Han, senior vice president of the aerospace division, said yesterday during a factory tour.

Korea Aerospace’s operating profit will likely more than double this year to 120 billion won, while sales will climb 18 percent to 1.3 trillion won, the company said today. Sales may reach 1.83 trillion won next year, helped by more non-government contracts, it said last year.

The company is considering competing with Bombardier Inc. and Empresa Brasileira de Aeronautica SA in the regional-jet market through an international venture to pare its reliance on defense sales. The study is still ongoing, Bae said.

To contact the reporter on this story: Sookyung Seo in Seoul at scha2@bloomberg.net.

To contact the editor responsible for this story: Neil Denslow at ndenslow@bloomberg.net

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