State-owned defence conglomerate Denel is facing a $7 million (R124 million) lawsuit from US company Draken International for failing to deliver nine of 12 Cheetah fighter jets ordered in 2017 for adversary air training.
On 19 August, Draken International in the Florida Middle District Court sued Denel Aeronautics for breach of contract over an alleged failure to fulfill a $35.2 million (R624 million) aircraft sale agreement.
The complaint, brought by Simpson Thacher & Bartlett and Stearns Weaver Miller Weissler Alhadeff & Sitterson, alleges that Denel delivered only three of 12 contracted Cheetah aircraft over seven years, owing Draken $7.1 million in advance payments plus damages. Draken apparently paid Denel $12.7 million (R225 million) under the project.
Court records show the case was assigned to a judge on 20 August and a summons issued to Denel on 21 August.
In a statement on 27 August, Denel said it was aware of the legal proceedings in Florida, and will be opposing the matter. The company will shortly file with the court its legal notices.
“While the matter is before the courts, Denel will not provide any comments on the merits and demerits thereof. However, Denel wishes to assure all stakeholders that it remains committed to fulfilling its contractual obligations, strengthening its operational performance and ensure the long-term sustainability of the business. Denel continues to focus on enhancing its capabilities and restoring confidence with all its partners and clients, both locally and internationally,” the statement concluded.
In December 2017, Denel reached an agreement for the sale of 12 ex-South African Air Force (SAAF) Cheetah fighter jets to Draken International. The contract included return to service and flight acceptance tests in South Africa and aircraft delivery to the United States.
Florida-based Draken International was going to use the jets for air support, pilot training, and tactical exercises. The sale included nine single-seat Cheetah C jets and three, dual-seat Cheetah D models (according to Scramble magazine, serials are 344, 345, 353, 361, 363, 369, 370, 375, 376, 845, 858 and 859). These would have been used for adversary training for the US Air Force, US Navy and US Marine Corps. Draken saw the Cheetah as complementary to its 22 modernised radar-equipped Spanish Mirage F1Ms.
Denel is the design authority of the Cheetah fighter that was locally developed as a variant of the Mirage III in the 1980s. The aircraft were retired from active duty in 2008 following South Africa’s acquisition of its new fleet of Saab Gripen fighter jets. Denel previously delivered 12 Cheetahs to the Ecuadorian Air Force, in 2011.
Denel Aeronautics delivered the first two refurbished Cheetah fighters (a single-seater and a dual-seater) to Draken International in October 2019 under Project Dragon. The third aircraft is believed to have been delivered in mid-2021.
In addition to the Cheetahs, Draken International acquired a vast supply of spares and equipment from Denel to support the Cheetah fleet, including the Cheetah simulator from Air Force Base Makhado.
defenceWeb understand that deliveries were hampered by delays at Denel in getting the aircraft flyable again (notably replacements for ejection seat components), followed by capacity issues related to state capture, and the Covid-19 pandemic. The US also scaled back outsourced adversary training, resulting in less demand for the Cheetahs.
According to African Defence Review Director Darren Olivier, “it’s a sad story of bad luck, worse timing, and missed opportunities, linked to State Capture killing Denel’s cash flow, Covid, and Draken losing a key USAF contract for the type.”
He said the Denel team at Aeronautics was doing “fantastic and extremely high quality work” getting the Cheetahs back to full flight ready status for Draken until State Capture began to cripple Denel and its cash flow, with Aeronautics one of the earliest hit. “Denel could no longer pay either suppliers or staff salaries, and couldn’t even buy things like ejection seat parts for the Cheetahs. It massively slowed things. Then Covid hit and had its own devastating consequences. The project hit a standstill, but was still salvageable.”
However, in 2021 Draken lost the USAF contract that the Cheetahs were intended for, and any desire by either side to complete the programme ended. “Only three Cheetahs were shipped to the US, but none flew as Denel could not at the time (but could later) support the ejection seats. The rest remain at Denel, though I’m not sure how many were ultimately regenerated. Most, I think,” Olivier stated.
“If the Dept of Public Enterprises and Treasury had been quicker to act & understood the value of keeping contracts like this going, they could’ve provided bridging finance to allow Denel to finish the deliveries, and Draken might be flying those Cheetahs today. But they dithered,” he added.
“It’s yet another example of a combination of corruption, poor management decisions, and a lack of expertise and capacity throughout government departments killing parts of the South African defence industry, especially Denel, and reducing the country’s credibility. I’d have loved to have seen the Cheetahs getting a new lease of life in Draken colours rather than languishing in a hangar somewhere or, worse, being scrapped,” Olivier stated. “I hope a fair settlement can be reached.”
