Airbus and Denel sign renegotiated A400M contract


Airbus and Denel Aerostructures have described as ‘win win’ their renegotiated contract covering the production of A400M components. The new agreement makes parts production economically viable for Denel and ensures Airbus that it remains a reliable supplier.

The contract was signed during a ceremony at Denel Aerostructures’ (DAe’s) facility at Kempton Park yesterday. It was attended by dignitaries that included Denel Group CEO Riaaz Saloojee, Public Enterprises Minister Malusi Gigaba and representatives from Airbus.

Ismail Dockrat, CEO of Denel Aerostructures, said the company was celebrating the conclusion of the renegotiated contract regarding the production of the wing to fuselage fairing (WFF) and top shell for the A400M military airlifter. “This successful outcome secure Denel Aerostructures’ future going forward,” he said.

Maggie Bergsma, head of Airbus media relations, said that the original 2005 contract with Denel Aerostructures was for 18 years but the new contract covers a 30 year period. Dockrat said the scope of the technical content has stayed the same but the pricing structure, terms and conditions and production schedule have changed in the renegotiated contract. Before, Denel Aerostructures was making a loss producing parts and both Denel and Airbus underestimated the effort involved in building A400M components. “We’re very happy that we’ve reached this new agreement, which is a win win situation for both of us,” Bergsma said.

Denel Aerostructures has had a rocky road, with years of consecutive losses. A ‘painful’ restructuring process began in 2009 saw some staff being cut in order to reduce losses. The company now expects to break even in 2016 or 2017. The confidence Airbus has shown in the company is a major boos to it getting further contracts.

Zoli Kunene, chair of Denel’s board, said that DAe’s successful track record on A400M production means the company has the capacity to work with global industry. “We believe there is great scope for growing the local aerospace industry.” Kunene said Denel was proud to be part of the A400M global supply chain and thanked the company for the confidence it has displayed in Denel Aerostructures. “We are looking forward to a strong and constructive relationship with Airbus for the duration of this programme.”

Antonio Rodriguez Barberán, Airbus Military Senior VP Commercial, said that, “I’m sure the agreement we are signing today is going to move us forward for the next thirty years.” Barberán said what Airbus liked most about Denel was its highly skilled workforce.

Dockrat said that his company would deliver eight A400M shipsets this year, 16 next year and 24 the year after that – in fact, Denel Aerostructures is delivering components ahead of schedule. The company is also tendering for other Airbus work and is close to concluding a contract to produce ribs and spars for the vertical tails of the A400M.

Dockrat noted that despite the global economic downturn, there remained strong demand for civil and military aircraft. He said that the company was engaging with other manufacturers about work, including Boeing, Bombardier and Embraer. “We are talking to a lot of companies out there,” he said.
“This announcement sends a strong signal: we are can take on more work. We are ready for business. We have the capacity.”

Pic: Atonio Rodriguez Barberán, Airbus Military Senior VP Commercial, and Public Enterprises Minister Malusi Gigaba following the signature of the renegotiated contract.