A400M decision may have little impact on SA workshare

Denel Saab Aerostructures (DSA) says the decision by Cabinet to cancel the acquisition of eight Airbus Military A400M Loadmaster aircraft after costs climbed and the aircraft remained grounded will not immediately affect the company.

DSA is a risk-sharing partner the €20 billion programme to build 184ofthe aircraft for eight air forces.
“The impact of the … cancellation … will have little impact in the immediate future on DSA as the aircraft is still in development phase.,” CE Lana Kinley told defenceWeb.

She has previously told defenceWeb DSA expected revenue of R13 billion from its A400M activities over the next 15 years.

Fellow SA risk partner, Aerosud, could not immediately comment on the impact of the decision on its workshare, estimated at R1.5 billion. MD Paul Potgieter did, however, describe the decision as “very unexpected.” He said Aerosud would next be assessing “the statement and the implications.”

Airbus Military also expressed surprise at the decision, saying it “very much regrets such an announcement, especially at a time where the programme is making very good progress towards first flight before the end of the year.”
“At this point in time, Airbus Military is studying the possible financial and industrial impact of this announcement,” the company said in a statement.

Airbus Military, under immense time pressure from the seven European air forces that still has 180 aircraft on order, uis unlikely to cancel DSA’s workshare.
“DSA is the design authority for two parts – the Wing-to-Fuselage Fairing and the Top Shells – and both have reached a mature stage of development.
“If Airbus cancelled this contract, the cost of redesign, production readiness and certification for an alternate supplier would be significant,” she said.
“Airbus is an extremely important customer to DSA and DSA hopes to retain its excellent working relationship despite the fact that the South African Government has decided to cancel its purchase contract.”

Looking ahead, she said DSA might lose out on future A400M contracts – beyond the 184 now on order – “in the event that it sells the aircraft to other countries and has some offset requirement.”

Defence strategist and consultant Rear Admiral Rolf Hauter (Retired) says a positive aspect of the decision is “that Cabinet has proven that it is master of the situation and that it will not be held to ransom by anyone.

He adds In terms of strategic airlift the cancellation is not seen as a “train smash” because it is well known that there are cheaper and probably more cost effective solutions at hand.

Hauter adds the cancellation and resultant “savings” could even be a blessing in disguise in that the funds earmarked for the project could be more appropriately used to address a wider range of strategic lift requirements, both air and maritime.
“Another alternative would be to channel the funds into improved borderline control where much needed equipment like UAVs (unmanned aerial vehicles), OPVs (offshore patrol vessels) and appropriate land vehicles could make a significant impact on cross border smuggling, poaching and other criminal activities. In the latter case, where the aerospace industry has lost out the landward and maritime industry may gain.”