Two major announcements concerning the South African aerospace industry, both involving leading local company Aerosud Holdings, were made within 24 hours of each other, immediately before the start of the Africa Aerospace and Defence 2014 exhibition. The announcements also concerned fellow South African company Denel Aerostructures (DAe), European major airliner company Airbus and South Africa’s Industrial Development Corporation (IDC).

The first announcement, on September 16, was that Aerosud and DAe had signed a tripartite memorandum of understanding (MoU) with Airbus at the DAe plant at OR Tambo International Airport, in Kempton Park. The MoU creates an industrial and research alliance between the three businesses.

“The fact that Denel [Aerostructures] and Aerosud will be working together should mean that they can jointly bid for bigger, more extensive and greater volume work,” said Airbus VP: international cooperation Simon Ward. “DAe has bigger tools and Aerosud can do smaller parts very efficiently. There are different capabilities in DAe and Aerosud.”

In terms of the MoU, the three companies will jointly develop industrial projects that will enable Aerosud and DAe to jointly bid for work packages on Airbus airliner programmes that would be larger than the work packages each could bid for on its own. In his address at the MoU signing event, Ward asserted that “[w]e sign a roadmap that will develop this industry for the next ten years”. The MoU builds on more than seven years of cooperation between Airbus and South African industry – since 2005, the European company had placed work packages and research projects in South Africa worth R4-billion.

At the same event, DAe CEO Ismail Dockrat said. “[The] signing of this MoU marks a major step forward for the South African aerospace industry. It represents a strengthened industrial alliance between Denel Aerostructures, Aerosud and Airbus. At Denel, we are delighted to strengthen our relationship with Airbus. For DAe, you, [Airbus], have been a critical partner.”

He noted that the South African aerospace industry was one of the few outside Europe that had the skills and capabilities to build parts for major aircraft projects, such as the Airbus A400M military transport aircraft. The MoU would allow DAe and Aerosud to jointly bid for key aerostructures work packages on large commercial aircraft projects.

“The significance of the event today [is that] we are getting to enter into close cooperation with the other key player in South African aerostructures, DAe,” stated Aerosud Holdings chairperson Dr Paul Potgieter in his address. “We are highly complementary operations; there is very little competition between us.” This meant that the two South African companies, one (DAe) State-owned and the other private-sector, were in a good position to form an alliance.

“This tripartite cooperation will position Aerosud and DAe to be able to work together and access a greater share of work from global players such as Airbus,” pointed out Department of Public Enterprises chief director Weekend Bangani, speaking on behalf of the government. “Airbus have demonstrated their long-term commitment to South Africa and the African continent.”

The second announcement, on September 17, saw Aerosud Holdings report that it had formed a strategic alliance with the IDC. As a consequence, the IDC has taken a 26% shareholding in Aerosud Holdings.

Aerosud Holdings has two subsidiary companies, the wholly owned Aerosud Aviation and the African NDT Centre, in which the South African enterprise holds 50% (NDT stands for nondestructive testing) and the other 50% is owned by a subsidiary of European airliner manufacturer Airbus.

“The IDC was not previously a shareholder,” noted Aerosud Aviation MD Johan Steyn. “It has financed industrial development for us since 1997, but it only became a shareholder in June.”

At the same time, Aerosud Holdings also announced that South African private-sector defence group Paramount had increased its shareholding in the aerospace company to 27%. The existing shareholders (basically, the people who founded Aerosud) have about 29% and 6% has been allocated to the current and new management. “We’ve also allocated 12% of the shares to an employee trust, defined as a black economic empowerment (BEE) trust” he reported. “We’ll be at BEE level four by next year.”

Aerosud is on course to reach a turnover of R1-billion a year within two years, and currently has an order book of some R5-billion. It manufactures more than 1.4-million assemblies and parts a year for Airbus, Boeing and their Super Tier One suppliers, Spirit Aerosystems and Labinal.