DSA expects R13bn in revenue from A400M


Denel Saab Aerostructures (DSA) says it expects to earn about R13 billion in revenue from its participation in the Airbus A400M Loadmaster military transport programme over a period of some 15 years.

SA is acquiring eight of the aircraft at a cost of at least 837 million euro (R9.6 billion). It was recently stated that the cost had escalated to R47 billion but Airbus Military and defence minister Lindiwe Sisulu have disputed this.

The programme is currently running between three and five years late and Airbus Military is currently negotiating a price increase with all nine countries acquiring the aircraft, 192 of which are on order.

DSA is a risk-sharing partner in the A400M programme along with Aerosud. Aerosud MD Paul Potgieter has said his company’s expectations from the programme amounts to a “similar magnitude.”

DSA CE Lana Kinley says the company has spent some R400 million in a facility upgrade to prepare for the production of its workshare. Treasury this week announced that it would make R192 million available to DSA year to help pay for this tooling.

The company is exclusively responsible for the production of so-called top shells for the centre fuselage section of the A400M, which it had also designed and developed. Engineering News’ Keith Campbell has picturesquely called these as being equivalent to roof panels.

The DSA says this is one of the largest composite-metallic hybrid structures on the aircraft. “This part’s main function is to provide aerodynamic efficiency over the wind box, as well as protecting critical aircraft systems.”

DSA is contracted to produce two top shells for each aircraft – one in front and one behind the wing box that joins the wing to the fuselage.

In addition, it is making very large wing-to-fuselage fairings, manufactured mainly from composite materials but including aluminium parts. The Engineering News notes each fairing is 15m long, 7m wide, and nearly 3m high.

“Due to the sheer size of the wing-to-fuselage fairing, most of the equipment we have bought is larger than that of most of our competitors,” said Kinley in comments sent to defenceWeb.

The Department of Public Enterprises this week said the A400M contract was awarded to DSA as part of a business exchange plan, set up with Airbus when the SA government signed “a deal to purchase the military aircraft as part of the South African Air Force’s renewal programme”.

The department in a joint statement with the DSA noted the design of the A400M structure “has raised South Africa’s engineering skill base.”

They add the “DSA has also developed a composite facility to global standards – with world class accreditation which will allow South Africa to position itself in advanced manufacturing and in obtaining further contracts in the aerostructures industry.”

Dr Ian Phillips, the late Special Advisor to then-Minister of Transport Jeff Radebe in a 2004 press statement noted that this was the fulcrum of SA’s participation in the programme.

Phillips then a Denel board member avered that the government, through the Departments of Trade and Industry (DTI), Public Enterprises and Defence, had been since “at least 2000” developing a strategy for the long-term development of South Africa’s high technology aerospace sector.

The DPE added that DSA has accreditation from the US National Aerospace and Defence Contractors Accreditation (NADCAP), which recognises the company as a competent supplier in the aerostructures market.

“DSA is the first company in the southern hemisphere to obtain NADCAP for composites production. DSA also has BV Certification AS9100 and approval from BAE Systems, Saab, AgustaWestland, Airbus and Boeing.

In addition to the wing-to-fuselage fairings, DSA is also contributing the ribs and spars for the tail fin as well as centre wing box structural components.

DSA’s facility has a wide range of capabilities including composite manufacture and testing, machining, sheet metal fabrication, assembly, and other special processes including large surface treatment tanks, chemical milling and heat treatment.

The engineering department is able to undertake concept design, definition and full scale development of metallic and composite airframe structures, structural analysis and extensive testing and certification including static, fatigue, birdstrike, lightning strike and hail.

“We are busy manufacturing components for MSN006 (A400M airframe number 6) at the moment,” adds Kinley. “But, as previously announced by Airbus, there is a year’s delay on MSN007.”

The delays in the A400M programme has cost DSA dearly. DSA posted a loss of R452.6 million for the year to March, largely because of delays in the A400M programme

“Unfortunately the A400M project has been hit by several delays which, in turn, have delayed some of the upgrades to our facilities,” says Kinley.

“We have invested in everything that will allow us to operate according to our requirements, but we have deferred peripheral projects like the transfer of our raw materials store from outside our facility into the main building.”

The delay of the Airbus A400M programme, as well as the global economic downturn, has meant that Denel Saab Aerostructures has spare capacity in its facilities, which it is actively engaged in filling from new directions.

The company’s intention is to reposition itself to supply not just major aircraft manufacturers but other market players as well.

“We are trying to target other aircraft manufacturers, one of which is Embraer, a Brazilian company. Our government has a strategic relationship with Brazil though IBSA (India, Brazil, South Africa) which is a South-South partnership.” This could involve SA participation in the Embraer’s new C-390 programme. The C-390 is an aircraft just smaller than the US Lockheed Martin C130, currently in service with the SAAF and up for replacement.

“On the other hand, as a relatively small player in the industry, we are trying to get into the supply chain of companies which could be perceived to be our competitors, but really are not due to the complementary strategy and product offering,” Kinley continues.

“The fact that our facilities allow us to do everything in one place is a huge advantage to us. Another advantage we have is that our equipment is bigger than many other companies would have, and that aerostructures are getting bigger because of weight-saving. Many manufacturers who would normally have invested in new capex (capital expenditure) in the light of this trend have delayed because of the condition of the market, so we may be able to get into their supply chain.”


Pic: Topshells on the assembly line at DSA.