Fin24

Denel to ramp up aerostructures

2012-05-29 17:01

Parliament - Public Enterprises says Denel will use a R700 million injection it received in this year's budget to ramp up the performance of its aerostructures business.

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 year's 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.

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 told Sapa that the Airbus contract represented a "ballpark" 80 percent 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, SA Air Force transport and maritime surveillance aircraft, as well as "regional jet requirements" by SA Express.

It was "not possible to compete unilaterally" without state support, Bangane said.