S Korea, Eurocopter sign $1.4 bln helicopter deal

SEOUL, June 5 (Reuters) South Korea and Eurocopter, a unit of aerospace firm EADS, signed today a development and production deal for 245 military transport helicopters with an initial value of about 1.3 trillion won (1.38 billion) dollars.

South Korea has been looking to build advanced military helicopters in partnership with foreign makers as it seeks to build up its aerospace industry and become more self-reliant in defence. The country launched an international tender two years ago.

Korea Aerospace Industries Limited (KAI) and Eurocopter, the Franco-German-Spanish division of EADS, signed the agreement in South Korea, marking the official start of the 73-month development process, EADS said in a statement.

KAI expects to build prototypes in 2008, with first flight tests scheduled for February of 2010, a company spokesman said.

An initial total of 245 helicopters would be manufactured once the development phase ends in 2011.

When South Korea announced the deal in December, defence ministry officials said the development project would initially be worth 1.3 trillion won but should grow substantially once the production phase starts.

One of the officials also said at the time production costs would be about 4 trillion won, but stressed there was a great deal of flexibility over other costs.

Under the initial deal, Eurocopter would produce about 15.5 per cent of the components, while 62.5 per cent would be supplied by domestic firms and the rest by 10 foreign manufacturers including British engineering company GKN Plc and French defence company Thales, the KAI official said.

REUTERS KD VV1601