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
"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.