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Denel dips into R700m injection to ramp up aerostructures

Sapa

The public enterprises department says Denel will use a R700-million injection it received this year to ramp up its aerostructures business.

Parliament has expressed concern that DAe was too dependent on the Airbus A400M contract it had recently re-negotiated. (AFP)

Briefing Parliament’s public enterprises portfolio committee on Tuesday, acting deputy director general Weekend Bangane told MPs that Denel Aerostructures (DAe) would start making profit in four years’ time.

Fundamental restructuring of the business was still underway, following a “painful process” of job cuts.

“There is still a long way before we see full light,” he said.

DAe’s core products include metallic and composite aircraft structures, such as wings, fuselages and fairings.

According to a document tabled at the briefing, “DAe remains in a turn-a-round phase and ... will continue to post losses in the short-to-medium term before achieving break even in 2016/17”.

Strategic challenges included revenue growth, competitiveness and skills development and retention.

Too dependent
Members expressed concern that DAe was too dependent on the Airbus A400M contract it had recently re-negotiated.

“Yes, it’s a concern,” Bangane conceded.

The department’s chief director financial analysis, Vuyo Tlale, later said the Airbus contract represented a “ballpark” 80% of DAe’s business, but could not give exact figures.

“The contract is [DAe’s] main one ... it’s quite substantial,” she said.

Earlier, Bangane said DAe had a number of other “small, and sunset” contracts with other manufacturers.

He further called for “focused government support” to involve DAe in procurement around, among others, South African Air Force transport and maritime surveillance aircraft, as well as “regional jet requirements” by South African Express.

It was “not possible to compete unilaterally” without state support, Bangane said. – Sapa

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