Saab to form new aerostructures business with Denel to be based in South Africa

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By Craig Hoyle and David Asquith in London

Sweden's Saab and South Africa's Denel are forming a new aerostructures company to be based in South Africa. The new company will compete internationally for aircraft design, manufacturing, and assembly work for civil and defence aircraft.

The companies’ chief executives and South Africa’s minister of public enterprises Alec Erwin have today signed agreements on the establishment, management and shareholding structure of the new company, which will be 20% owned by Saab and 80% owned by Denel, although Saab intends to increase its holding over time.

The joint venture will initially employ about 600 Denel Aviation staff who will be "led through the transformation process by a team of specialists deployed from Saab Aerostructures", says Saab. Saab is set to assume management duties on 1 August and eventually the new unit will be integrated with the Swedish operations. Saab is investing R66 million ($9.9 million) in the venture while Denel will make a “proportional capital investment.”

The new company will produce aerostructures for Gripen, A400M and Airbus commercial aircraft. As part of the agreeement Denel will send staff to Sweden for training and use existing Denel facilities in Johannesburg and Pretoria.

Ake Svensson, chief executive of Saab says the deal “is another milestone as we consolidate our relationships and expand our presence in our second home, South Africa.”

"This is a good business case for us," says Saab. The company is also looking at other areas of possible future cooperation with Denel.

The South African government will grant Saab offset credits in line with the industrial participation programme requirements to a maximum value of $2.4 million based on the company’s performance, Saab says.