Arms maker Denel, which has been struggling for several years to find buyers for its attack helicopter, the Rooivalk, received a huge confidence boost on Friday when it was short-listed as one of the two bidders for the $2bn contract to supply the Turkish army with attack helicopters.

Denel’s management has identified the sale of noncore assets, leveraging on its information technology speciality, and forming strategic partnerships with other aerospace companies as part of its “macro strategy” to return the money-losing parastatal to profitability.

Last year the company posted a net loss of R1,6bn. It has asked government for a R5,1bn recapitalisation — of which R2bn has already been used to move the company out of technical insolvency. The company told Parliament earlier this year that it expected to break even only in the 2009-10 financial year.

Winning the tender will not only inject much-needed cash into Denel but will also ensure the survival of the Rooivalk.

Denel CEO Shaun Liebenberg was recently quoted as saying the Turkish deal was “probably the best opportunity we’ve ever had with Rooivalk”.

“The future of our helicopter capability is dependent on this deal,” said Liebenberg. To date only the South African Air Force has bought the Rooivalk.

In a move seen as a snub to the Rooivalk, SA’s defence ministry placed an order for 30 Agusta light utility helicopters from Italy.

The helicopters were acquired as part of the arms deal SA signed in 2000.

Military analysts said at the time that the defence ministry’s decision to buy outside the country was indicative of its dissatisfaction with the Rooivalk’s capabilities. But the helicopter now seems to have turned a corner, thanks to vigorous marketing by Liebenberg and Public Enterprises Minister Alec Erwin.

Turkish Defence Minister Vecdi Gonul said Denel would face off against Italy’s Agusta Aerospace for the tender to supply Turkey’s army with state-of-the-art attack helicopters.

“We aim to purchase 30 attack helicopters in the first phase and later we can buy 20 more,” said Gonul.

Turkey has initially planned to buy 91 attack helicopters.

Gonul said that technical and financial negotiations would be pursued with the two short-listed bidding companies.

Franco-German company Eurocopter and Kamov of Russia were eliminated.

Gonul said: “US companies withdrew because of some legal problems over the transfer of technology. The goal is to co-produce the helicopters, not to buy them off-the-shelf.”

Bidding rules included full access to the aircraft’s specific software codes — which the US considers a security risk — and a written guarantee from the provider’s government that there will be no political obstacles to the export of the arms.

Gonul said the winning bidder would be announced at the end of the month.

Liebenberg said he was “extremely pleased” that Denel had been short-listed.

“Clearly we have a lot of work to do,” he said.

“But we have all along been confident that the Rooivalk helicopter was best suited to meet the requirements of Turkey’s ATAK (Tactical Reconnaissance and Attack Helicopter ) programme and we believe that both Turkey and SA stand to benefit significantly from this programme.”

With acknowledgement to Khulu Phasiwe, Sapa and Business Day.