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Airbus loses 8 orders, SA loses R40 billion millstone (and peacekeeping ability)

Airbus loses 8 orders, SA loses R40 billion millstone (and peacekeeping ability)

As expected, Cabinet has agreed to cancel an order with Airbus for military transport planes. The government seems to think it'll get a full refund, and given Airbus' recent bullish forecasts, it is probably right.

The regular post-Cabinet meeting briefing on Thursday had just one highlight: the official decision to cancel an order for 8 Airbus A400 military transport planes. Those would have cost somewhere well north of R40 billion (according to the SA government) and somewhere far south of that mark, according to Airbus.

The cancellation has been fully expected since that R40 billion number emerged in mid-October, but what would have been surprising back then is the apparent Airbus attitude to the R2.9 billion deposit already put down. Cabinet says the money will be refunded, in full, with no deductions, reductions or penalties levied.

What has changed in the interim is Airbus’ forecast for market conditions. Airbus this week said it would deliver at least as many planes in both 2009 and 2010 as it did last year (when it handed over 483 aircraft) – despite the global recession.

The return of the deposit, and the budgetary relief of not having to make ongoing payments, will be a considerable relief to the Treasury. But the cancellation does put a dent in the Mbeki-era vision of a rapid-reaction African peacekeeping force. The A400s are made to carry helicopters and armour over medium distances. Without this new fleet, the SA National Defence Force does not have the capability to deploy such equipment quickly. If infantry units are rapidly deployed (transporting people is relatively easy), they will have to rely on local hardware for point-to-point transport and armour support. In areas where there is actual fighting, that will definitely mean more troops coming back in caskets.

But hey, at least we’ve got some cool new submarines and frigates, so we can police our fishing waters effectively.

By Phillip de Wet

Read more: Reuters, Bloomberg

WATCH: A400M launch

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