Korean Air and IBM Announce Strategic Outsourcing Contract

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Seoul - 21 Dec 1998: ... Korean Airlines and IBM Global Services today announced that they have signed a contract with Korean Air for the first phase of a Strategic Outsourcing Relationship.

Under the contract, for which a Letter of Intent was announced in September, IBM Global Services will provide data center operations services for Korean Air, assuming responsibility for the Operation and Technical support of the airline's major computer systems.

The outsourcing contract is valued at US$120 million over a 10-year period.

"IBM will invest with Korean Air in developing a new IT infrastructure, processes and organization for the airline" says Mr. Y. H. Cho, president of Korean Air. "This will enhance Korean Air's competitive advantage through a long term reduction in Information Technology costs and improved quality of service to our passengers."

To deliver Strategic Outsourcing Services to Korean Air and other customers, IBM has formed a 100% subsidiary; IBM Global Services Korea.

IBM Korea's President, Mr C.C Shin said, "The Korean Air contract with IBM Global Services represents a significant breakthrough for outsourcing services in Korea."

"Increasingly we are seeing Korea's major organisations focusing on their core capabilities. IBM is working with these organisations and offering comprehensive IT services that will allow them to improve their competitiveness.

"We are leveraging IBM skills and technology from around the globe to provide business solutions to organisations in Korea," Mr Shin said.

Korean Air and IBM are close to reaching a final agreement on the second phase of their strategic relationship - the roll out of a new internet enabled network around the globe. "Exploiting IBM's network services will enable Korean Air to rapidly deliver new improved services to all our customers and will enable us to expand our international reach," said Mr Cho. The agreement for this second phase is expected early in the new year.

Korean Air, which was established in 1962, is one of Asia's largest passenger airlines and the world's second largest cargo freighter. It operates 146 domestic flights per day to 16 cities in Korea. Internationally, it operates 359 flights per week to 74 cities. Korean Air's fleet consists of 36 Airbus, 47 Boeing, and 30 other aircraft.

IBM, the world's largest provider of IT solutions and services, provides a broad range of products, services and integrated solutions to all segments of travel and transportation industry. IBM already is a major supplier of strategic outsourcing services to airlines around the world, including Cathay Pacific, Varig, Air Canada, Air New Zealand and Ansett Australia. IBM Global Services, with 120,000 employees, has been growing rapidly as organizations increasing look to technology to increase efficiencies, manage costs, and improve their competitiveness.

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