(Adds detail, context)
JOHANNESBURG, Oct 11 (Reuters) - South Africa’s Denel is winding up its struggling Aerostructures aircraft parts business after receiving government approval, the state arms company said on Friday.
Denel, a cornerstone of South Africa’s once-mighty defence industry, is battling to emerge from a financial crisis and has pledged to shutter loss-making divisions.
The decision to close Aerostructures comes after Denel reached an agreement with Airbus to stop producing parts for the European planemaker’s A400M military aircraft.
A Denel statement said 230 employees would be affected by its decision to close Aerostructures. Some employees will be transferred to other positions within Denel and voluntary severance packages have been offered.
CEO Danie du Toit said the decision to close Aerostructures was in line with Denel’s long-term profitability strategy.
Denel made an operating loss of 1.9 billion rand ($127 million) in its 2018/19 financial year after a similar loss the previous year.
Denel said support functions for military helicopters and aircraft at its Kempton Park campus would not be affected.
Denel is also exploring opportunities to attract business in fields such as unmanned aerial vehicles, it added. ($1 = 14.9652 rand) (Reporting by Alexander Winning Editing by David Goodman)