Denel CEO Riaz Saloojee
Denel CEO Riaz Saloojee

STATE arms company Denel and manufacturer Russian Helicopters yesterday signed an agreement that will result in the two creating a servicing hub for Africa.

Denel, which has declared modest operating profits for the past two financial years after years of losses, further announced the acquisition of a majority stake in local armoured vehicle manufacturer LMT.

Denel has been under pressure to grow its order book, having faced heavy criticism earlier this year from Parliament’s portfolio committee on public enterprises for its slow pace in growing revenue.

Since then the company has embarked on a public relations offensive announcing deal after deal for its business units. In July it announced a R3.5bn arms and maintenance deal for Denel Land Systems with Malaysia.

Earlier this week a renegotiated deal was signed between Denel Aerostructures and aircraft giant Airbus to manufacture components for its A400m military carrier.

The Russian Helicopters deal makes Denel Aviation the only company in sub-Saharan Africa accredited to perform maintenance, repair and overhaul services for models produced by Russian manufacturer.

Russian Helicopters said it had about 280 helicopters in service across Africa.

Denel CE Riaz Saloojee said the Russian Helicopters agreement would significantly expand the company’s business in Africa.

CEO of Denel Aviation Mike Kgobe said the agreement represented the culmination of a long-standing partnership between the two companies. "Our objective is to become the maintenance hub for most of the modern commercial and military aircraft operating in sub-Saharan Africa ."

Russian Helicopters CEO Dmitry Petrov said he expected the civil aviation market to grow significantly. "We see great potential for our helicopters in countries across Africa.

"Working with Denel Aviation will allow us to provide a complete customer care programme for our clients on the continent."

The LMT deal will result in Denel becoming a 51% shareholder in the company with the remainder belonging to Pamodzi Investments (29%) and the founding member of the firm retaining a 20% stake.

Denel said LMT and its design and manufacturing facilities in Waltloo would become part of Denel’s specialist landward defence cluster.