After two years of negotiations, European aviation manufacturer Airbus said on Monday it has refunded Armscor R3.5 billion on the aborted deal to buy A400 military transport aircraft.
The refund is for pre-delivery payments made by South Africa for eight A400 planes before the deal was cancelled in November 2009 amid repeated delivery delays and complaints of cost increases.
“The agreement we signed with Armscor on November 29, draws a line under the cancelled A400M acquisition, but crucially, it lets us all move forward together to explore further opportunities, including upcoming acquisition projects led by Armscor," said Airbus Military CEO, Domingo Urena.
The company stressed that despite the cancellation Denel remained responsible for the manufacture and supply of several parts of the aircraft, including aircraft top shells, wing fuselage fairing (a structure that reduces drag), wing tips and cabin insulation and lining.
It said the wing-fuselage fairing would be the "largest single aircraft component ever manufactured in South Africa".
Airbus denied that the cost of the deal had ever escalated beyond the original contract price of R9.1 billion.
However, the cancellation of the contract followed a statement by a former Armscor CEO Sipho Thomo that the price had spiralled from R17 billion to R47 billion as a result of delays.
Defence Minister Lindiwe Sisulu said at the time that the contract provided for unilateral cancellation if there was a delay of 14 months in meeting milestones.
In June, Armscor told Parliament's standing committee on defence Airbus had been haggling over demands for a refund for 18 months.
"Airbus could pay the money overnight if need be," Armscor chairman Moreti Motau said.
"But the issue was trying to lock us into some sort of relationship which Airbus thought was very important."
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