LONDON (AFX) – Mike Turner, chief executive of UK defence giant BAE Systems PLC, said he remains confident that both the Meteor missile programme and the Airbus A400M military transporter project will get the go-ahead once the German election is over.
“Meteor has to be the missile for the Eurofighter … and A400M will happen because Europe needs it,” he told AFX News in an interview.
In Germany, which was severely hit by recent floods, the cash-strapped
government is still reviewing its commitment to the A400M and Meteor projects. Both projects heavily depend on German financing.
Responsibility for the A400M falls under Airbus SAS unit Airbus Military SAS, in which Airbus parent company, the European Aeronautic Defence and Space Co NV holds a significant stake, together with the aerospace industries of Belgium, Portugal and Turkey. BAE Systems PLC, which holds a 20 pct stake in Airbus, is also part of the project.
The Meteor missile, on the other hand, is being developed by MBDA, a joint venture in which EADS and BAE Systems hold 37.5 pct each and Finmeccanica the remaining 25 pct.
As for Austria’s commitment to buy Eurofighter jets, Turner said he expects “lengthy discussions with the Austrian government” before a firm order is placed.
And talks with the Indian government regarding the possible order for 66 Hawk trainer jets, are also ongoing. “But we are still optimistic for Hawk in India,” said Turner.
While European defence programmes seem to be dogged by delays, the US
defence market is strong and BAE Systems, which is already a significant player on that market, hopes to further strengthen its position there through acquisitions.
“We are second to none in the UK and we hope to one day be second to none in the US,” Turner commented.
He was speaking after the group unveiled a disappointing set of first half results, which showed a 16 pct drop in earnings before interest and tax to 461 mln stg. Analysts had been forecasting EBIT in the range of 518-560 mln stg.
The unexpected drop in earnings was mainly attributable to slowing
commercial aerospace sales as well as “significant short-term challenges in certain residual UK shipbuilding programmes that incurred contract losses in the first half.”
BAE Systems’ pension fund has been affected by the slump in stock markets and, as at June 30, the valuation basis that would be used shows an increase in the FRS 17 pension deficit to 1.300 bln stg after taking assumed deferred taxation into account.
However, the group’s pension funding requirements are derived from separate independent actuarial valuations which are currently being produced, said the group in a statement. At this stage these indicate no additional cash funding requirements for 2002, 30 mln stg for 2003 and 60 mln per annum thereafter.
Despite first half results falling short of market expectations, BAE Systems said it remains confident that grow will resume in 2003, despite the fact that the group still faces a number of challenges.
The outlook depends on the impact of the change in programme emphasis as a result of the New Chapter to the Strategic Defence Review, which places greater emphasis on Network Centric Capabilities. “As the creation of our C4ISR(3) business demonstrates, we see this as a major growth area and opportunity for the company,” said the group in a statement
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September 12, 2002 at 9:02 am