State-owned defence firm Denel said on Tuesday it could not pay salaries for May and wages for June and July were at risk, highlighting the gravity of its financial position.
Denel is one of a number of struggling state enterprises the government has been keeping afloat with bailouts but are now being battered by the fallout from the coronavirus pandemic.
Despite a slight easing of South Africa’s lockdown restrictions this month, Denel is running a reduced operation.
“Denel is not in a position to pay salaries for May. Also the June and July salaries are in serious jeopardy,” Denel said in a message to employees seen by Reuters.
Denel CEO Danie du Toit said in a separate statement the company was in ongoing conversations with the government “to find solutions to the current crisis”.
Denel, which makes military hardware for the armed forces in South Africa and around the world, is awaiting a R576-million bailout announced in a budget speech in February, after receiving a R1.8-billion bailout last year.
The CEO is heading an effort to return Denel to profitability with a strategy based on cost-cutting, selling assets and bringing in strategic equity partners. — Reported by Alexander Winning, (c) 2020 Reuters