[Factory Tour] Kenkoa Aerospace Dreaming of Growing into a Comprehensive Mobility Company

[Asia Economy Reporter Hyunseok Yoo] "We conduct quality inspections throughout all processes starting from the receipt of raw materials. Since our products are directly linked to aircraft safety, defects are absolutely unacceptable."

At the headquarters of KenkoAerospace (KenkoA) located in Sacheon, Gyeongsangnam-do, Jae-oh Seo, Head of Management Support, emphasized the company's strict quality control system.

Kenkoa Aerospace Sacheon Plant 2 Exterior / Photo by Hyunseok Yoo

Founded in 2013, KenkoA is engaged in businesses including supplying aerospace raw materials, aircraft parts processing, parts assembly, and maintenance (MRO). The company has its headquarters, factory, and aerospace logistics center in Sacheon, Gyeongnam. Additionally, it operates a maintenance business at Gimhae Airport and an assembly business at the Korea Aerospace Industries (KAI) Boseong plant. It has also established two subsidiaries in the United States.

The Sacheon factory produces various aircraft parts. Sacheon Plant 1 manufactures parts necessary for converting commercial aircraft into cargo planes. KenkoA also produces the tail wings of the Boeing 767 and the main wings of the 777.

Plant 2, located just 10 minutes from Plant 1, was completed at the end of 2019. The first floor assembles defense products such as helicopter and fighter jet parts. Most helicopter parts are manufactured and assembled there using a turnkey method. Both Plant 1 and Plant 2 conduct most of their work manually, as automation would require significant investment and many processes are difficult to mechanize.

Mr. Seo highlighted the greatest strength of the company as the synergy between its U.S. and Korean operations. He explained, "In the U.S., based on long-standing experience, the company serves as a cash cow while steadily growing. Leveraging this, Korea is also securing orders worth hundreds of billions of won in the global market, showing rapid external growth."

Min-kyu Lee, CEO of Kenkoa Aerospace / Photo by Hyun-seok Yoo

After touring the factory, a video interview was conducted with CEO Min-gyu Lee, who is currently in the U.S. CEO Lee expressed confidence in the company's performance improvement this year. KenkoA recorded 10.2 billion KRW in sales and 200 million KRW in operating profit in the first quarter, a 3.55% increase year-on-year, with operating profit turning positive.

CEO Lee said, "Korea is experiencing full-scale growth, with the cargo plane conversion and MRO businesses expanding. Especially, military maintenance has relatively high added value." He added, "Although it might seem that cargo plane conversions temporarily increased due to COVID-19, there was already steady demand, and growth is now accelerating."

He also stated, "The aerospace business initially required certification and investment, so sales were low. Now, large-scale projects have entered mass production stages, and significant growth is expected."

He cited vertical integration as a differentiating factor between KenkoA and other aerospace companies. While publicly listed aerospace companies remain focused solely on aircraft parts manufacturing, KenkoA operates across aerospace raw material supply, aircraft production, aircraft modification and maintenance, as well as launch vehicle and drone businesses. This diversification enabled the company to quickly return to profitability last year despite COVID-19.

Interior view of Kenkoa Aerospace Sacheon Plant 1 / Photo by Yoo Hyun-seok

KenkoA is not content with its current businesses and is preparing for future growth engines. The company is currently pursuing the acquisition of a U.S. launch vehicle parts company and has formed a partnership with German flying car global company Volocopter to promote urban air mobility (UAM) and urban air taxi businesses.

He said, "The launch vehicle business, which had been under development or at the prototype stage for several years, is now actively progressing. Although we started relatively late, we expect opportunities."

He added, "Currently, Volocopter's entry into the domestic market is limited, but ultimately, as Volocopter is expected to grow fastest globally, our goal is to play a key role in their supply chain."

Finally, CEO Lee explained that his goal is to grow KenkoA into a comprehensive mobility company. He said, "We are still small but have big dreams to become a comprehensive mobility company. We will strive to deliver good results to investors and clients who trust and invest in us."