Carrier Also Maintains Aerospace Division

Something resembling an aerospace empire is quietly emerging in South Korea. Not many know this, but the nation's flagship airline, Korean Air, isn't JUST an airline... it's a full-fledged aerospace business. The Los Angeles Times reports few people within the aerospace industry -- and even fewer outside it -- realize the breadth of work Korean Air performs.

From a 170-acre complex in Gimhae, Korean Air manufactures parts for a variety of aircraft, including Boeing and Airbus jets. From 737s to 777s, and A330s through A380s... all have parts that started life at Korean Air. The airline's aerospace unit will also supply parts for Boeing's upcoming 787.

That's not all. The division also refurbishes fighter jets and helicopters for the US military, and develops rocket and satellite components, all part of an operation Teal Group analyst Richard Aboulafia describes as "unique."

"Not many people know about it, but they're doing a bunch of work," he added.

The aerospace unit began life in the 1970s, when the South Korean government put out a call for a homegrown developer of military aircraft. Soon, the company was producing military helicopters for McDonnell Douglas.

Since then, the division has grown into a powerful leverage tool -- as Korean Air has been able to secure work from both Boeing and Airbus, partially in exchange for buying their planes. Korean Air mechanics also perform service work for approximately 30 other carriers. The airline even operates its own catering business, as well as several hotels... including a Grand Hyatt at the carrier's Incheon hub.

It is conceivable one day, the airline could produce an entire aircraft -- and be able fly it, and maintain it themselves until it is decommissioned. Even then, Korean Air could refurbish the plane for other uses; the carrier already rebuilds older 747 passenger jets into freighters.

In fact, the Times reports Korean Air currently is beholden to only one outside interest: it has to buy fuel from outside suppliers. But even that may soon change.

The company is part of Korea's Hanjin Group, a consortium of air, land, and sea shipping interests founded by the current airline chairman's father. The airline is an affiliate of Hanjan Shipping Co -- which is currently bidding on South Korea's third-largest oil refinery.

FMI: www.koreanair.com