South African state-owned defence equipment manufacturer Denel and Airbus Military have signed a new agreement for manufacturing components for the A400M military transport aircraft.
The renegotiated agreement, which will contribute to the financial turnaround of Denel, was signed in Kempton Park, east of Johannesburg, on Monday.
Public Enterprises Minister Malusi Gigaba said the new agreement demonstrated the confidence of major global aerospace companies in the abilities of the South African manufacturing sector.
'A fully-fledged aerospace industry'
"The relationship between Airbus and Denel takes us to another step further towards the growth of a fully-fledged South African aerospace industry," he said.
Group chief executive of Denel, Riaz Saloojee, said the relationship with Airbus positioned Denel Aerostructures (DAe) as an established supplier of high-tech aircraft parts, and strengthened South Africa's position in the global aerospace industry.
Airbus Military senior commercial vice president Antonio Rodriguez-Barberán said the agreement "re-affirmed Airbus Military's commitment to South Africa and its industrial partners and suppliers in the country.
"With production of the A400M ramping up ahead of the first deliveries next year, it is comforting to know that we have a dependable partner in DAe which can be relied upon to provide top quality work, on time and within budget," Rodriguez-Barberán said.
DAe manufactures two major work packages on the A400M, the wing-to-fuselage fairings and the top shells, which form part of the aircraft's mainframe.
Small sub-contractors contribute to global programme
Saloojee said the new agreement, together with the restructuring of the company and a strong order pipeline, would enable DAe to return to profitability within the next three to four years in line with a turnaround strategy introduced in 2010.
The government had also demonstrated its confidence in the future of the company through a capital injection of R700-million earlier this year.
"This agreement has vindicated this confidence and confirmed the viability and inherent potential of Denel Aerostructures in the years ahead," Saloojee said.
Chief executive officer of Denel Aerostructures, Ismail Dockrat, said the company had already ramped up its production of vital parts for the A400M that will be delivered to customers in the coming months.
Denel's participation in the programme has already brought significant benefits to the local aerospace industry.
The new agreement will stabilise local supply chains and give experience to smaller sub-contractors to perform work on a global programme.
Saloojee said the contract with Airbus confirmed South Africa's status as a reliable supplier to multinational projects and an innovative design partner.
"It provides DAe with the know-how and capacity to participate in future multinational ventures and to grow the local industry, as envisaged in the recent Defence Review 2012," he said.
"It will strengthen DAe's position in South Africa's aerospace industry, and confirms its position as a strategic public asset, its contribution to skills development and advanced manufacturing, and its potential to generate export revenue for the country."
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