DENEL Aviation CEO Mike Kgobe has begun informing 538 employees that they will be retrenched on March 31 as the South African Air Force (SAAF) has not renewed its contract with aircraft maintenance personnel and there is no other business to replace it.

The SAAF gave notice last year that it wished to terminate the contract for the civilian aircraft maintenance personnel due to end on March 31, but the state-owned company has failed to find business to replace the contract, which was lost after the auditor-general’s report last year found it was irregular and in conflict with the Public Finance Management Act and Treasury prescripts.

Department of Defence spokesman Siphiwe Dlamini said: "It is important that a clean break be done for the interest of the organisation (SAAF) and all interested parties. What then follows post-April 2013 is another matter. We have been keen to find a new dispensation, which will take us into the future."

The state-owned company has held this contract since 1986 and it refuses to disclose its value, citing client confidentiality.

Denel said in a media release on Thursday it had begun a process of communication with employees of the Denel Personnel Solutions (DPS)-Aero Manpower Group (AMG) regarding the future of the contract to supply personnel to the SAAF to ensure its operations.

Denel spokeswoman Sinah Phochana said the company would engage unions in terms of the Labour Relations Act to reach consensus on issues that will affect the potential future employment of the affected workers.

"Because DPS has no contract or order cover beyond this date, the company has no other option but to consider retrenchment for the entire DPS-AMG workforce," Ms Phochana said.

She said Denel was considering alternatives to retrenchments, including alternative employment.

Ms Phochana said the company would continue to negotiate with the SAAF to determine whether alternative solutions for the future of the contract could be found. "Denel is still hopeful and believes that it will find an amicable solution through our ongoing discussions with the SAAF and the South African National Defence Force," she said.

Solidarity spokesman Jack Loggenberg said it was not clear how many employees would be retrenched or whether the affected employees would also lose their housing. He said the SAAF was under pressure to cut expenses. The union was concerned it would wait until all the employees have been retrenched before appointing some of them on a lower salary to do the same work.

Mr Loggenberg said most of the 538 technicians facing retrenchment were administrative staff and were mainly white males over 50 years of age. "Many of them are highly skilled, but that does not mean they can just walk into another job as the private airline sector is also facing challenges," he said.

The loss by Denel of the contract is similar to the recent furore around the transfer of seven fisheries and survey ships from the management and crewing by Smit Amandla Marine to the South African Navy.

The multimillion-rand contract has been renewed several times by the government without an open tender process until March this year, when an independent investigation found some irregularities. Public Protector Thuli Madonsela is investigating that process.

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• Denel technicians face uncertain future

 

With acknowledgement to Paul Vecchiatto and Business Day. 

After this, watch how quickly Denel thrusts out its begging bowl to Parliament and the Treasury.

And how some cadres seem to quickly become capable aircraft technicians.

Just as quickly as Julius Malema became a Limpopo civil engineer.

It's all part of the ANC's grand theory of redistribution.