02 Juli 2010

Singapore Chooses Italy's M-346 Trainer Jet

02 Juli 2010

Alenia-Aermacchi's M-346 (photo : Flight Global)

SEOUL - Singapore's government has selected Italy's Alenia Aermacchi, maker of the M-346 aircraft, as the preferred bidder in its trainer jet contest, industry sources here said July 1.

As a result, South Korea's T-50 Golden Eagle aircraft suffered a second defeat, following a loss last year in a trainer jet competition in the United Arab Emirates (UAE).

The UAE selected the M-346 over the T-50, jointly built by Korea Aerospace Industries (KAI) and Lockheed Martin of the United States, as the preferred bidder for a $1.3 billion deal to acquire 48 trainer jets. The Italian company has failed to finalize an agreement with the UAE, reportedly over a side deal concerning the joint development of UAVs.

"I've been told that the T-50 suffered another defeat apparently, as the M-346 has been picked up as the preferred bidder for the trainer jet contest in Singapore," an industry source said, asking not to be named. "The Singapore government has yet to make public the result of its decision on the successful bidder, and is expected to announce it soon."

Neither KAI nor South Korea's Defense Acquisition Program Administration (DAPA), responsible for T-50 overseas sales, confirmed the information.

"I understand the announcement on the final bidder will be made as early as in mid-July, or it could be delayed to September or October," a DAPA spokesman said. "But I don't know what decision the Singapore government has made."

KAI officials were not available for comment, while an Aermacchi spokesman said he had no information to provide on the matter.

Once confirmed, however, the defeat in the Singapore competition will likely deal a serious blow to KAI's potential trainer jet tenders in other nations, such as Poland, the United States and Iraq, observers here say.

KAI also hoped to reopen talks with the UAE over the sale of T-50s by capitalizing on the Gulf state's stalled talks with Aermacchi, and on a landmark $20 billion deal with South Korea involving nuclear reactors.

Moves to privatize KAI also likely will gain strength. The administration of South Korean President Lee Myung-bak began an effort last year to privatize state assets, including its stake in KAI.

The state-owned Korea Development Bank (KDB) announced in April 2009 that it would sell its 30.5 percent stake in KAI, which has three other major local shareholders - Samsung Techwin, Doosan Infracore and Hyundai Motors, each with a 20.54 percent stake.

But KDB temporarily withdrew from its decision in the face of opposition from KAI's labor union, which argued that the privatization effort could hurt overseas sales of the T-50.

Currently, the Korea Finance Corp. (KoFC), which was spun off from KDB, holds the government's stake in KAI.

Earlier this year, a KoFC official said, "If KAI fails to sell the T-50 to Singapore, discussions of the KAI privatization would certainly be resurfaced. Our position will be re-established after that."

The T-50 and M-346 are considered to be among the best advanced trainer jets on the global market. Although they have been purchased by their respective home customers, the air forces of Italy and South Korea, the UAE contest was their first duel in an international market, with the M-346 appearing to claim victory.

The difference between the UAE and Singapore evaluations is that Singapore will contract for a total training system, including simulators and classroom trainers. The UAE is choosing an aircraft and will then hold a separate competition for a training system provider.

Aermacchi teamed up with Singapore defense company ST Aero to compete with the KAI-Lockheed team in Singapore. The ground-based training system to support the M-346 would be provided by Boeing's training systems division, which is a third partner on the ST Aero-Aermacchi team.

Both KAI and Aermacchi are seeking to pitch their trainer jets to the U.S. Air Force to replace its aging T-38 trainers. The Italian company, part of the Finmeccanica industrial group, also has teamed with EADS to propose the M-346 for a long-planned pan-European project known as the Advanced European Jet Pilot Training program.

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