State defence firm Denel announced on Tuesday that it was struggling to pay salaries for May to its employees while wages for June and July were at risk, EWN reported.
The aerospace company 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 Covid-19 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 chief executive 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 chief executive is heading an effort to return Denel to profitability with a strategy based on cost-cutting, selling assets and bringing in strategic equity partners.
Last month, the aerospace company joined efforts to help fight the Covid-19 pandemic by leading a project to build a prototype of a local mechanical ventilator.
“Denel is mobilising its resources and expertise towards a priority project for the local design and development of medical ventilators in support of the national response to the Covid-19 pandemic,” it said.
Denel’s Project Sabela will see research bodies like the Council for Scientific and Industrial Research join forces with Armscor, Eskom and other entities to develop medical ventilators for local use.