Defence Minister Lindiwe Sisulu says she does not expect any major fallout from government's decision to pull the plug on its contract with Airbus Military.

Sisulu was referring to an Airbus/Denel deal, which enables the state-owned enterprise to manufacture parts for the Airbus A400M.

The minister says although government will no longer be purchasing eight heavy lift aircraft, this should not affect the Denel contract.

The purchase was meant to boost South Africa's peacekeeping abilities as well as benefit local industry and manufacturing components for Airbus but delays and cost escalations forced government to cancel the multi-billion rand transaction.

Sisulu says at this stage the move should not impact on Denel's contract to build and supply Airbus parts.

"We will wait for them to see if they will terminate the contract with Denel. If they do, then we will count the costs at that point but at the moment the industrial participation project will continue," says Sisulu.

Airbus Military says it will study all contracts, before deciding on the way forward.

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