BAE Systems Renegotiating U.K. Aircraft Carrier Contract Terms
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The defense company, Europe’s biggest, is considering contract changes to reflect “increased maturity” of the program, London-based BAE Systems said in a statement today. The first of two carriers is nearing completion.
The company said it’s also in talks with the U.K. government over how to bring shipbuilding capacity in line with demand. The U.K. is not buying enough vessels to sustain three surface shipyards once work on the carriers winds down.
BAE said trading was in-line with expectations and that the full-year earnings target will be met assuming successful conclusion of talks with Saudi Arabia over the pricing of Typhoon combat jets. Delays in talks over the so-called Salam program, which the company was aiming to complete last year, could decrease earnings per share by as much as 7 pence.
BAE, which began a three-year, 1 billion pound share repurchase in February, has so far bought 34 million shares for 134 million pounds. The transactions have helped boost the stock, which has advanced 65 percent this year, valuing the company at 38 billion pounds.
The company also said it has agreed to make a 340 million pound cash contribution to its pension system during the share repurchase period, accelerating a plan to make up shortfalls.
BAE is undergoing several management changes, with Roger Carr, now chairman at British Gas parent Centrica Plc (CNA), joining the board this month before replacing chairman Dick Olver next year. The company also is seeking a replacement for Linda Hudson, who announced Aug. 20 she would leave her post as head of the BAE’s U.S. operations.
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