On May 14, NICE Investors Service upgraded the credit rating outlook for Korea Aerospace Industries (KAI)'s senior unsecured bonds from 'AA-/Stable' to 'AA-/Positive'.
In its report released that day, NICE Investors Service stated that the upgrade reflects improved operating performance driven by expanded exports of completed aircraft, as well as the expectation that, in the medium term, increased deliveries will ease working capital burdens and improve financial stability indicators.
KAI was established in 1999 as a joint venture between Daewoo Heavy Industries, Samsung Aerospace Industries, and Hyundai Space and Aircraft. With exports to countries such as Poland and Malaysia, the order backlog in the completed aircraft export segment increased significantly from KRW 980 billion at the end of 2021 to KRW 5.2919 trillion at the end of 2024.
NICE Investors Service commented, "Considering the remaining order backlog and delivery schedules, excellent operating performance in the completed aircraft export segment is expected to be maintained," and added, "The defense and civil sectors are also showing relatively stable operating results, so it is expected that improved operating performance will continue in the medium term."
The agency further noted, "Inventory assets have increased due to large-scale mass production contracts. The Boeing strike and issues with aircraft parts supply are also factors that have expanded working capital burdens." However, it anticipated, "After the second half of 2025, as the delivery of the second batch of 26 FA-50 aircraft to Poland proceeds, working capital burdens will decrease, making it possible for financial stability indicators to improve."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
