Johannesburg – State defense 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.
The company is one of a number of struggling state enterprises the government has kept afloat with bailouts but are now being battered by the fallout from Covid-19 pandemic.
Even though South Africa has eased 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,” said Denel in a message to employees.
Chief executive Danie du Toit said in a separate statement that the company was in ongoing conversations with the government “to find solutions to the current crisis.”
The chief executive is heading an effort to find a strategy that will return Denel to profitability based on cost-cutting, selling assets and bringing in strategic equity partners.