Denel made a R1.7 billion loss in the 2017/18 financial year. Last year Denel faced a liquidity crisis, which saw it battle to pay its 3 500 employees and seek government assistance. Photo: Siphiwe Sibeko/Reuters
Denel made a R1.7 billion loss in the 2017/18 financial year. Last year Denel faced a liquidity crisis, which saw it battle to pay its 3 500 employees and seek government assistance. Photo: Siphiwe Sibeko/Reuters

Denel exits aerostructures, but aeronautics division still flying

By Philippa Larkin Time of article published Feb 7, 2020

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JOHANNESBURG – The process of exiting its aerostructures manufacturing business was at an advanced stage with retrenchments on the cards, Denel said yesterday.

The state-owned arms company had applied to the Public Enterprises and Finance departments to wind up Denel Aerostructures, which was granted last year.

Under Denel’s turnaround strategy the company is exiting non-core areas of activity, divesting from non-viable core business areas and focusing on viable core business activities to return to profitability.

Denel made a R1.7 billion loss in the 2017/18 financial year. Last year Denel faced a liquidity crises, which saw it battle to pay its 3 500 employees and seek government assistance.

The divisional chief executive of Denel Aeronautics, Mike Kgobe, said the company had concluded the consultation as required by the labour act, with relevant stakeholders including unions and representatives of non-unionised employees.

“The consultation process was facilitated by a senior CCMA commissioner and will result in retrenchments based on operational requirements,” it said.

Denel said that it had tried to keep job losses to a minimum and some of the employees would be transferred to other positions within the Denel group while voluntary severance packages had also been offered.

Denel group chief executive Danie du Toit said the decision to wind up the company was in line with the broader long-term strategy to reposition Denel and return it to profitability.

The winding-up of the Aerostructures Manufacturing business will not affect other businesses conducted by Denel Aeronautics at the Kempton Park campus.

“This includes the support given to the Rooivalk combat helicopter, the Oryx medium transport helicopter, the C130 transport aircraft together with the export business for the Cheetah multi-role fighter aircraft and Puma helicopter and various maintenance, repair, and overhaul services provided to both the SA Air Force and other customers,” Denel said.

Last year, Denel announced that it was exiting the Airbus A400M Atlas aerostructures contract to save up to R250 million a year, and lost its other major aerostructures work due to the company’s liquidity crisis.

Denel Aeronautics recorded revenue of R833 million for the year, down from R1.107 billion the year before, and made a loss of R696m.

BUSINESS REPORT

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