[Asia Economy Reporter Hyunseok Yoo] Kenkoa Aerospace has increased the possibility of visible external growth thanks to the expansion of orders for passenger-to-freighter conversion (MRO).
Kenkoa Aerospace announced on the 29th that it will begin full-scale mass production of the passenger-to-freighter conversion business supplied to ST Engineering, one of the world's top three MRO companies.
Along with orders for passenger-to-freighter conversions, the company explained that achievements in space launch vehicle projects such as NASA Artemis launch vehicles and Blue Origin rocket engines are also continuing, and it is expected to achieve record-high performance not only in the second quarter but also this year.
The rapid increase in demand for passenger-to-freighter conversions from global companies including airlines, the decrease in belly cargo supply due to reduced international passenger flights, and the early retirement of passenger aircraft by airlines worldwide have combined to sharply increase market demand for passenger-to-freighter conversions recently.
About 35% of freighters are newly produced, while approximately 65% are produced through conversions of existing passenger aircraft, indicating a large proportion of conversions. As demand for freighters rapidly increases, Kenkoa's passenger-to-freighter conversion business (PTF Conversion) volume is expected to increase significantly, and related orders are anticipated to expand further.
A company official stated, “Due to the increase in freighter demand, the ongoing passenger-to-freighter conversion business is expected to increase up to four times over the next three years,” adding, “We are fully committed to accelerating production and securing additional production capacity accordingly.”
While other aircraft manufacturers experienced significant losses last year, Kenkoa’s U.S. subsidiaries succeeded in maintaining solid performance. This is attributed to supplying special raw materials for the space industry and expanding launch vehicle projects to more than 30 companies in the space sector, including NASA, SpaceX, and Blue Origin.
Kenkoa CEO Min-kyu Lee said, “Based on recently procured funds, we plan to conduct a paid-in capital increase of $10 million (approximately 11.2 billion KRW) in our U.S. subsidiaries during the second quarter to expand and establish production facilities related to the space launch vehicle business,” adding, “We plan to actively invest in the rapidly growing U.S. space market.”
He continued, “Although COVID-19 posed a major crisis to the aerospace manufacturing industry, Kenkoa, which has continuously expanded its business areas such as aerospace MRO and space launch vehicle businesses, has gained an opportunity to grow into one of the world’s top 100 aerospace manufacturers,” and added, “As achievements are emerging not only in the freighter conversion business but also in the space launch vehicle business, we expect not only performance growth but also an increase in corporate value.”
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