While defense companies such as Hanwha Aerospace, Hyundai Rotem, and LIG Nex1 are enjoying a boom, Korea Aerospace Industries (KAI) is struggling as it falls behind competitors in major project bids. The industry sees the vacancy in the president's post since July as a factor.
According to the industry on the 27th, the company is having difficulty finding a suitable candidate, with some figures mentioned as candidates for KAI president declining the role. The KAI president's seat has been vacant since former President Kang Gu-young, appointed under the Yoon Suk-yeol administration in September 2022, resigned on July 1, shortly after the launch of the Lee Jae-myung administration. For now, Vice President Cha Jae-byeong, head of the fixed-wing division, is serving as acting chief.
The industry believes the leadership vacuum is also affecting exports of complete aircraft. KAI recently lost out to a Korean Air–LIG Nex1 consortium in succession on the UH-60 Black Hawk helicopter upgrade project worth 1 trillion won and the Korea-style electronic warfare aircraft order worth 1.7775 trillion won.
An industry official who requested anonymity said, "With no CEO in place, it is difficult to move forward on major export deals such as the Surion for the Middle East and the FA-50 for Peru and Egypt. It appears the annual order target will not be met."
In a statement in August, the KAI labor union said, "Key programs such as preparations for KF-21 mass production, FA-50 exports, Surion, and MRO (maintenance, repair and overhaul) are being delayed one after another, and on-site anxiety is growing as export negotiations worth hundreds of billions of won have yet to reach a conclusion."
There are calls for a swift appointment of a president so that major decisions such as large-scale investments can be made. Jang Won-jun, a professor in the Department of Advanced Defense Industry at Jeonbuk National University, said, "An acting chief's role is essentially managerial, and it is difficult to make big decisions, including large-scale investments." Choi Gi-il, a professor in the Department of Military Studies at Sangji University, said, "A prolonged CEO vacancy is not desirable, but appointments of the Export-Import Bank chief and the head of the Defense Acquisition Program Administration need to come first, so it could take more time." The largest shareholder of KAI is the Export-Import Bank of Korea.
KAI has experienced ups and downs whenever administrations changed. Of its eight presidents to date, only former President Ha Seong-yong was promoted from within, and two were from the military, with one of them from the Army. Most presidents were replaced when administrations changed, and Ha resigned shortly after a change in government over alleged personnel corruption, later receiving a suspended prison sentence.
KAI is characterized as a "quasi-public company," with the Export-Import Bank holding 26.41% and the National Pension Service holding 8.83%, for a government stake of about 35.24%. Minister Ahn Gyu-baek of the Ministry of National Defense, when asked at a National Assembly audit about privatizing KAI, said, "At a time when K-defense has taken off, I feel deeply troubled that KAI is not doing its part."