Denel and Airbus have reached a mutual agreement to transfer the manufacturing of aircraft parts for the A400M military airlifter out of Denel, subject to fulfilling applicable legal prescripts.

Danie du Toit, the Group Chief Executive of Denel, says that in light of Denel's ongoing strategic review of its operations, the two companies agreed that the continued manufacturing of aircraft parts by Denel is no longer sustainable in its current form. Alternative options are now being considered between the two parties.

Denel and Airbus continue to collaborate in other areas and intend to build, expand and strengthen their strategic industrial partnership.

South Africa decided to join the A400M programme in 2005 with an order for several aircraft. Airbus transferred skills and technology to enable Denel to design, develop and manufacture the A400M wing-to-fuselage fairing and top shells. Additional A400M work packages were subsequently awarded to Denel for the vertical tail-plane's ribs, swords and spars, the cargo deck floor ISO locks and the Central Guide Vertical Restraint System.

These items are manufactured at Denel Aeronautics in Kempton Park.

Denel is currently implementing a new long-term strategy to reposition the company and return it to profitability.

The new approach includes:

-The exiting of non-core areas of activity, divesting from non-viable core business areas and focussing on viable core business activities that will led to long-term sustainability

-Repositioning the core viable business areas to leverage capital and market access

-Focussing on export opportunities through strategic equity partnerships and joint ventures.