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Aviation History
1995
1995 - 2685.PDF
BUSINESS ANALYSIS Denel makes its mark Denel has progressed rapidly in a short time. KEVIN O'TOOLE/LONDON r\ENEL HAS COME a long -L-'way in a short time, says its chief executive Johan Alberts. It is hard to disagree. The group was formed a little over diree years ago, as South Africa set about putting its state- owned defence and aerospace industries onto a more commercial, business-like footing in readiness for the country's re-emergence on to the world stage. What has since emerged is a large conglomerate, with sales now just over R3 billion ($840 million) and with a workable spread of busi nesses ranging from electronics and communications dirough to the core defence and aerospace operations. As a rough guide to scale, the Simera aviation grouping, incorpo rating Adas Aviation as its military arm, accounts for about a quarter of group sales. Perhaps most impressive is the speed widi which the group has established its credentials as a world player. Alberts believes that its aviation businesses are now active in at least 70 countries around the world, while other group interests bring the tally clos er to 100. "We've been very busy building a level of confidence in the group," he says. Take the Adas Rooivalk attack helicopter. The programme was conceived while Soudi Africa was sail in isolation and yet, by 1994, Adas had been invited to bid for die UK attack-helicopter requirement. Admittedly, the Rooivalk failed to go the full distance, its involve ment regarded by some as a politi cal move to furdier UK arms sales in South Africa, but the fact that it was there at all as a serious con tender counts as a major coup. Alberts is confident that the Rooivalk programme, now widi its Johan Alberts is confident that the Rooivalk programme, now with its third prototype flying, can carve out a healthy niche as an attack helicopter independent of the USA or Europe. third prototype flying, can carve out a healdiy niche for itself, espe cially among countries attracted by the prospect of buying an advanced attack helicopter which is indepen dent of die USA or Europe. The Rooivalk was, after all, designed at a time when South Africa itself required such self-sufficiency. Competitions in Malaysia, India and elsewhere should give die Rooivalk a chance to prove its worth, says Alberts. He is cautious of talking about customers, but sug gests that at least one export deal could be revealed later this year. To date, die project has only 12 orders from die Soudi African military. It needs around 50 to become a credi ble programme, admits Kobus Eksteen, who heads Denel's av iation grouping. He too hints diat there is business in hand which will help die Rooivalk to clear diat bar rier. Military sales are no longer Denel's main preoccupation, how ever. While sales to die South African forces stood at nearly two- diirds of group turnover when Denel first started out, reliance on such business has been falling steadily. Today, it accounts for less dian half of group sales as new commercial and export markets have begun to take off. The move is reflected widiin die aviation group. Only 22% of sales are civil, but die strategic goal is for 60%. Alberts adds diat this growth is in die context of a planned doubling in aviation turnover, to R1.5 billion. "Ifwe achieve diat in die next four to five years we'll be doing well," he says. Simera has built on its strengths in aircraft modification and main tenance (learned during the years of embargo) widi a drive into international airline markets, including neigh bouring African nations. "We could very easily become the maintenance work shop for Africa," says Alberts. Eksteen says diat die new civil- maintenance business has booked in 35 aircraft for 1996, ranging from die Boeing 727 and McDonnell Douglas DC-9 upwards. He adds that this is just a "starting point". "We could very easily become the maintenance workshop/or Africa" By 1996, Simera will also have started shipping the first cargo- conversion kits for the Airbus A3 00 under its co-operation agreement with Daimler-Benz Aerospace (DASA). Work has begun on the first four kits, all against customers orders, says Eksteen. The first should be in die air by the end of 1996, he adds. Further co-operation with DASA is in prospect under the wide-ranging promises of invest ment in South Africa announced in 1994 by die German group. Discussions over Simera's involve ment in Dornier 228 production are probably not viable, says Eksteen, but he believes that diere could be a future for cargo conver sions of the Dornier 328. Discussions continue, he says, admitting diat it is still Simera's long-term goal to see aircraft assembly take place in South Africa. Another example of internation al partnership has seen Simera pro duce die accessory gearbox for the Rolls-Royce RB.211-535, and the group sees no reason that this can not be expanded to other engine parts or other gearboxes. The only area in which Denel cannot seek alliances is the USA, where South Africa is under a denial order from the State Department over allegations of sanctions-busting. Alberts hopes that inter-Government efforts to lift the ban will soon bear fruit. "We know that US companies want to work in collaboration with us. The order has to be lifted at some point, and I diink it will happen sooner rather than later," he says. Removal of the denial order is perhaps the last act in separating Denel from past politics. Despite its state ownership, Alberts argues that Denel is now dioroughly inde pendent, "...doing business like any odier international company". With the group making respectable profits (a net result of R260 million) in 1994 and showing little debt, Alberts says that privati sation is not a pressing issue for Denel or its Government owner. It is not every government owner which can say the same. • 32 FLIGHT INTERNATIONAL 20 - 26 September 1995
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