What Ever Happened to that Deal for a Dozen Cheetahs?

South African defense conglomerate Denel is in some hot water with an American client, after news of a modest lawsuit broke.

Draken International asserts Denel Aeronautics breached a $35.2 million USD contract when they failed to deliver all 12 of the Cheetah fighters as ordered. After 7 years, Draken only received 3 aircraft, and the dysfunctional South African manufacturer seems unable to fulfill the rest. Draken is suing for $7.1 million in advance payments issued, plus damages, which is less than the $12.7 million they paid Denel to take on the project to start. The deal allowed Denel to clear out a lot of their aging gear, as Draken was given a large supply of spares and support equipment, even the appropriate simulator for the type. Had all gone as planned, everyone would have been happy. Denel would be able to resell aged–but effective– combat aircraft to Draken, who would have put them to work in its adversarial military contracts here and abroad.

This whole brouhaha started in 2017, when Denel agreed to sell 12 of their former South African Air Force Cheetah fighters to Draken. That deal included return to service and flight testing in South Africa, as well as delivery to the States. The Cheetahs in question were a mix of 9 single-seaters, and 3 tandem seat fighters, and in time Draken only got one trainer and two fighters suitable for delivery. From the sound of things, Denel had issues with the exact parts needed to get the rest of the order up to the standard required, which worsened with cash flow issues and delayed salaries to employees. Ultimately, the Cheetahs sent to the states hadn’t even flown, but were shipped awaiting elements for their ejection seats.

To some at Draken, the short delivery may have been a blessing in disguise, since the USAF began to shake up its contracted services. Draken was the only operator under the Adversary Air program, a program shuttered in 2022. Instead, the USAF offered contracts under the Combat Air Force Contracted Air Support (CAFCAS) program, which ultimately awarded Draken International and AZ up-and-comer Top Aces. That will provide services for CAS and adversary air through 2029. With their share of the pie somewhat trimmed from what it used to be, Draken may not want to have a dozen fighters to maintain, especially after seeing some of the fancy gear Top Aces has been able to snag under its Advanced Aggressor Mission System for its flagship F-16s. The Cheetah, derived from the Mirage III, is a fine aircraft, but nearly every fighter a commercial operator could obtain probably isn’t so hot compared to a well-equipped Viper.

Fans of military gear may recall a pretty cool portfolio at Denel. As things often go in South Africa, there are fingers pointing in every direction. Denel has had a rough…decade at the very least, sitting on the brink of failure in 2015 thanks to the usual conflux of factors. State capture, mismanagement, corruption, declining defense budgets, and a worsening brand name, all come to mind, on top of running cash flow issues. As debt mounted, production slid further back on the calendar, and customers found other places to spend their money. By 2018, Denel had gotten some extensions on debt instruments, and shook up the executive lineup a bit, somewhat energized by a turnaround plan. That went into effect from 2020 on, when Denel tried to settle liabilities and paid back-salaries owed to long-suffering employees. As they got on tottering legs, Denel got hit with the rest of the world by the COVID shakeup, and some bad hands in the sales arena undid a lot of that hard work. 

Denel’s Badger IFV once expected to produce hundreds of vehicles, and has been chopped down to less than a hundred, at last count. The A-Darter AA missile went into production in 2015, but only apparently got delivered to customers this year. Other deals simply fell through, like an SA missile to Egypt, because they just couldn’t make the funding work. That isn’t so much Denel’s fault, but a simple fact of their market niche: Weapons manufacturing is already dominated by the big names, backed by their geopolitical flag bearers, and South Africa simply can’t throw their weight around like the East & West can.

Some in the domestic industry believe Denel could have navigated the troubled water if the State had been willing to fund the Draken contract early in the deal and get the Denel house in order, but it’s all in the past now. Maybe the other 9 Cheetahs can be scooped up by another client in time, if Denel can get them proper airworthy too.

FMI: www.denelaeronautics.co.za