Denel SAAB Aerostructures (DSA) remains a loss-making challenge to Denel, the Department of Public Enterprises said in Parliament on Tuesday.

Addressing a portfolio committee on public enterprises on the future of DSA, department director-general Tshediso Matona, said that while DSA's losses were not as high now as in 2008/9, it was still in the "red".

Losses in March 2009 amounted to R444-million, while in February 2011, losses stood at R259-million.

SAAB, which had owned 20% of DSA since 2007, exited the business last month.

Matona said that while talks to sell DSA to the Aerosud group were ongoing, the department was restructuring the business.

The department's acting deputy-director general for investment and portfolio management, Anthony Kamungoma, said restructuring was taking place because it could not simply work on the basis that Aerosud would buy DSA.

"We don't want to be in a situation where we put all our eggs in one basket. If the deal doesn't come to execution then we'll have to look at other methodologies to address the crisis."

Aerosud, a private sector enterprise, and the State-owned DSA, produce significant and essential components for the Airbus Military A400M.

This, as a result of South Africa joining the A400M programme as a partner and ordering eight of the military transporters in December 2004.

The order was cancelled in 2009, raising questions about the future of local industrial participation in the A400M programme.

Delays in the programme and alleged cost overruns caused the government to cancel its order.

Kamungoma said that these delays and cost overruns were also some of the reasons behind the crisis in which DSA found itself.

Matona said the department would have a better idea on a way forward for DSA once the department of defence outlined its priorities, as these aircraft were for the defence force.

"We have been asked by the joint defence committee to come back next week. The minister of defence will be tabling a strategic document... It would inform these [DSA's] decisions. We need to know the defence department's plans."