Airbus A400M delay knocks R167 million off Denel’s anticipated revenue

The Department of Public Enterprises (DPE) says delays with the Airbus A400M Loadmaster transport has already shaved R167 million off the revenue forecast of Denel Saab Aerostructures.
The DPE, in answer to a question asked in the National Assembly, says that while it has “limited insight into the technical delays being experienced by Airbus, it is anticipated that delays of between one and two years in the serial production schedule would be experienced by all suppliers to the programme.”
It adds that the “financial impact of such possible delays … have already been included in the new budget cycle for DSA, with a reduction in company revenue of R167 million.” The DPE is state-owned Denel’s sole shareholder and DSA is a 80:20 joint venture between Denel and Saab of Sweden.   
“This delay in expected revenue will be recovered in future years as production orders would have to be ramped up to mitigate the initial backlog in deliveries. 
“As the company has yet to commence with industrialisation for serial production, there is no significant impact on resource capacity. However, as with all suppliers to the A400M programme, DSA will face a serious challenge to retain engineering and artisan skills who have participated in first-article manufacture, as these skills would be essential to lead the series production process,” the DPE says.
The state department adds that three SA companies are involved in the 192-aircraft programme, namely DSA (large structures such as top shells, wing-to-fuselage fairings, ribs, spars and swords for wings and empennage), Aerosud (smaller structural assemblies and interior liners), as well as Saab Grintek (on-board health and usage monitoring systems).
In the meantime, DSA as a “Tier 1 supplier to the programme” is busy with design, development, qualification and manufacturing work … for all contracted work packages.
“To ensure compliance to specifications and aerospace standards there is also a significant amount of testing and certification work to complete to release the first prototype to the Flight Test Program. Delays in workload will probably only be experienced when production orders have to be placed for the following batches of serial production aircraft, which should be towards the end of 2009.
“DSA anticipated a potential delay in the programme in mid to late 2008. Management action was taken immediately to mitigate the impact of this slip on DSA A400M milestones as well as the associated supply chain. Procurement of non-essential material was reduced in consultation with referred to companies and, where possible, resources were rescheduled to save costs,” the DPE adds.  
“DSA is continuously in touch with the management of [Airbus], in order to re-evaluate the situation proactively, to ensure that the required supply chain is maintained and that effective resource planning can be conducted to ensure effective reactivation of the programme to its full potential.