Denel takes 'major steps' to limit job losses as it winds up exit from aerostructures business

Denel's office in Pretoria (Reuters)
Denel's office in Pretoria (Reuters)

State-owned arms producer Denel announced in a statement released on Thursday afternoon that its exit from its Aerostructures Manufacturing Business was at an advanced stage and that "major steps" had been taken to minimise the impact on jobs. 

The announcement comes after Denel indicated its intentions to exit from the division in October last year and transfer the manufacturing of aircraft parts to alternative suppliers. 

The divisional CEO of Denel Aeronautics, Mike Kgobe, said the company concluded consultation in terms of section 189 of the Labour Relations Act with organised labour as well as those representing workers that do not belong to a recognised union.

"We have really worked hard in trying to keep job losses to a minimum and some of the employees will be transferred to other positions within the Denel group while voluntary severance packages have been offered," said Kgobe.

The Denel Group Chief Executive Officer, 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 (MRO) services provided to both the SA Air Force and other customers," the statement added.

The bid to save costs forms part of Denel's turnaround strategy, which includes plans to diversify and eventually end loss-making operations.

The utility secured a R1.8bn lifeline from government in August last year amid doubts about its ability to continue paying staff salaries.

Late last year, Denel leadership told Parliament's Portfolio Committee on Public Enterprises that a new business the entity was looking into was providing assistance to the airline freight businesses of SA Express and South African Airways, Fin24 previously reported. SAA was placed in business rescue last year, while the Johannesburg High Court has in the interim ruled that SA Express must be placed in business rescue, which it intends to appeal. 

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