BAE Systems to slash 2,000 jobs as orders dry up

BAE Systems will eliminate almost 2,000 jobs as it struggles to secure new orders for the Eurofighter Typhoon warplane and slims down its naval ships and cyber-security businesses.

Some 1,400 posts will go at the company’s military-aircraft unit, which employs about 12,500 people, with a further 375 positions to be eliminated in the maritime division and up to 150 at the Applied Intelligence cyber arm, BAE said in a statement yesterday.

While Europe’s biggest defence company last month won an outline order for 24 Eurofighter jets from Qatar, worth as much as £8.6 billion (€9.62bn), that deal may take months or years to seal.

At the same time, a long-awaited follow-on contract from Saudi Arabia has so far failed to materialise.

BAE needs to align its workforce “more closely with near-term demand,” chief executive Charles Woodburn said, adding: “Those actions are necessary and the right thing to do for our company, but unfortunately include proposed redundancies at a number of operations.”

The London-based company reiterated that full-year earnings per share are likely to be 5%-10% higher than 2016’s 40.3p.

BAE had said in August it was reviewing output of the Typhoon, adding that even if a new order was placed it would take at least 24 months to boost production.

Earlier this week BAE said it continually reviews its operations to make sure it is performing as effectively and efficiently as possible.

The Qatar order, announced on September 17, came as a surprise, especially since the Gulf state had already agreed to buy 24 Rafale jets from France’s Dassault Aviation and as many as 36 Boeing F-15s.

UBS analyst Celine Fornaro has said it’s not clear what impact the putative deal might have on the anticipated contract from Saudi Arabia, which is seeking to isolate its neighbour over ties to Iran.

In addition to BAE, the Eurofighter consortium includes Rome-based Leonardo, and the German and Spanish divisions of Toulouse-based Airbus. While the plane is priced at about £90m (€101m), through-life servicing and other add-ons can quadruple that value.

Bloomberg


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