A person involved in the deal and familiar with Korean Air's thinking says it will never pay anything like the market price, which last week valued KAI's equity at 2.5 trillion won.

While noting that the company is highly priced compared with foreign aerospace manufacturers, such as Boeing, equities analysts at Nomura say that “KAI has a better growth outlook for the next five years, in our view.” It is unclear why KAI should be expected to grow strongly, however. Its civil work will presumably expand only in line with global commercial aircraft demand. As for defense, its biggest new program—to build the 245 Surion utility helicopters—will run at a modest building rate over roughly 10 years. The prospective Korean Attack Helicopter program, not yet launched, will have a similarly drawn-out production profile. Like any national arms supplier, its prospects for revenue and profits are very much in the hands of its defense-ministry customer.

One reason for the high price of the shares could simply be patriotism among South Korean investors, combined with the small fraction of the company's stock that is freely traded.

Until the Asian financial crisis of 1997-98 forced reorganization, South Korea had four aircraft manufacturers: the aerospace divisions of the Samsung, Hyundai and Daewoo conglomerates, which were merged to make KAI, plus Korean Air. Korean Air was able to resist a government push to include its aerospace business in KAI, too—presumably because Korean Air would have been only a minority shareholder.