Noteworthy Items from BAE Systems Half-Year Results (selected excerpts)
(Source:; posted July 31, 2019)
PARIS --- Below is our selection of the most noteworthy items from the BAE Systems financial results statements for the first half of 2019, released this morning.

Exports to Saudi Arabia

BAE Systems continues to provide equipment, support and training under government to government agreements between the United Kingdom and Saudi Arabia.

Following the updates in March from the German government regarding export licences, we are working closely with industry partners and the UK government to continue to fulfil our contractual support arrangements in Saudi Arabia on key European collaboration programmes.

BAE Systems notes the judgment in June from the Court of Appeal of England and Wales directing the Secretary of State for International Trade to revisit the process for granting export licences for the sale of military equipment to the Kingdom of Saudi Arabia. Both the Secretary of State and the other party to the proceedings have sought and obtained permission to appeal the Court's ruling to the Supreme Court. BAE Systems will assess the result of any re-consideration by the Secretary of State of its decision-making on the basis set out by the Court, once it has been made.

US Market:

The Group's US-based portfolio remains aligned with customer priorities and growth areas with support for key programmes, including electronic warfare programmes, F-35 Lightning II, combat vehicles, current and future precision-weapon systems and naval ship repair and modernisation services. The order backlog for the US-managed business grew by $1.0bn (£0.8bn) in the first half of the year.

The Electronic Systems business is approaching full-rate production on the F-35 electronic warfare programme, and closed the 2019 half year with a record order backlog and a portfolio well aligned to the US National Defense Strategy.

UK Market:

Defence and security remains a priority for the UK government with the next phase of the Tempest next-generation combat air programme contracted between industry and UK government. The Memorandum of Understanding signed in July between the UK and Sweden committing both governments to work on a joint combat air development and acquisition programme is a welcome development.

2019 production ramp-up of rear fuselage assemblies for the F-35 Lightning II aircraft programme progresses well towards 140 sets, with full rate production levels targeted in 2020. As the UK and global fleets grow, securing a long-term support position on F-35 Lightning II remains a key focus for the Air business.

Typhoon support continues to perform strongly and, with the Centurion standard having been declared, the UK Tornado fleet successfully retired from service on schedule.

Typhoon production is currently focused on completing the UK final aircraft and the remaining partner nation deliveries, sub-assembly build on the Kuwait programme and the Qatar programme, which sustains production revenues into the next decade. The potential pipeline for Typhoon additional orders remains positive, with opportunities both with partner nations and through exports with existing and new customers. Securing additional orders would extend or enhance current production revenue levels.

International markets:

In Saudi Arabia, the Memorandum of Intent signed between the Kingdom of Saudi Arabia and the UK government in March 2018 remains under discussion for a further 48 Typhoon aircraft, support and transfer of technology and capability. This would enable BAE Systems to continue with the Industrialisation of Defence capabilities in the Kingdom of Saudi Arabia, in support of the Saudi Arabian government's National Transformation Plan and Vision 2030.

The final assembly of the Typhoon would follow on from the Hawk programme where the first In-Kingdom final-assembled Hawk aircraft was completed in May and entered service with the Royal Saudi Air Force in June.

Over many years the company has developed and taken shareholdings in local Saudi businesses. The company is restructuring its portfolio of interests in these businesses through the disposal in January of its shareholding in Aircraft Accessories and Components Company, and through entering into a heads of terms for the sale of its stake in Advanced Electronics Company to Saudi Arabian Military Industries, with the transaction expected to take place towards the end of the year.

The contract between BAE Systems and the Government of the State of Qatar for the supply of 24 Typhoon and nine Hawk aircraft to the Qatar Emiri Air Force, along with a bespoke support and training package, is progressing well and a contract amendment to accelerate deliveries was agreed.

In Oman, deliveries continue on a five-year availability service for Typhoon and a support package for Hawk aircraft. (end of excerpt)

Click here for the full statement, on the BAE Systems website.


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