A BAE Systems aircraft flies without a pilot in UK airspace shared with passenger flights for the first time.
Read more: Pilotless flight success over UK
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A BAE Systems aircraft flies without a pilot in UK airspace shared with passenger flights for the first time.
Read more: Pilotless flight success over UK
UK aerospace company BAE Systems wins a £2.5bn contract with the Sultanate of Oman to supply Typhoon and Hawk jet aircraft.
Originally posted here: BAE Systems wins Oman contract
David Cameron hopes to seal deal, which is worth billions of pounds and will safeguard thousands of jobs, on official visit
Oman is expected to sign a multibillion-pound deal to buy 12 fighter jets and eight training planes from BAE Systems on Friday, a sale that the government says will safeguard thousands of jobs in the north of England.
David Cameron is hoping to seal the deal on a visit to Oman, his second since taking office. Cameron will meet the Sultan of Oman to discuss trade and regional foreign policy challenges – including Iran, Egypt and Yemen – and then the two men will view Typhoon fighter jets at the country’s Seeb airport.
Oman is expected to order 12 of the fighters, worth £2.5bn, and eight Hawk 128 training aircraft from BAE Systems.
“I’m determined to put Britain’s first-class defence industry at the forefront of this market, supporting 300,000 jobs across the country,” Cameron said ahead of the deal. “The Typhoon fighter jet performed outstandingly in Libya, and so it’s no surprise that Oman want to add this aircraft to their fleet.” The deal will safeguard jobs at BAE factories in Lancashire and Yorkshire, and small companies throughout the UK that support production of the aircraft, he added.
The Oman deal is part of a government effort to sell 100 aircraft to the Gulf region in 2013, sales which could be worth more than £6bn to UK firms, Downing Street said in a statement.
Exports to Oman in 2012 are already worth more than £370m.
Defence company to decide this year whether to close shipyard in Portsmouth or Glasgow, putting more than 1,000 jobs at risk
BAE has confirmed it is considering closing one of its major shipyards in a move that could threaten more than 1,000 jobs. The defence company’s UK chief executive, Nigel Whitehead, told the Sunday Telegraph a decision was expected by the end of the year.
The future of its three major bases – one in Portsmouth and two in Glasgow, at Govan and Scotstoun – has been under threat after BAE launched a review of its maritime operations at the start of the year. It is believed Portsmouth is most at risk and a closure could reportedly threaten about 1,500 jobs.
Whitehead told the newspaper that plans for a “reduction in footprint” could see “the cessation of manufacturing at one of the sites”. “We will be making decisions this year,” he added.
The blow comes after last month’s collapse of the planned mega-merger between BAE and Airbus parent EADS.
The two groups called time on the tie-up – which would have created the world’s biggest defence and aerospace group with 220,000 staff worldwide and combined sales of £60bn – after political hurdles proved insurmountable.
BAE said it was in contact with the Ministry of Defence as it reviews its shipbuilding future. It added: “We continue to work closely with the Ministry of Defence to explore all possible options to determine how best to sustain the capability to deliver complex warships in the UK in the future. This work is ongoing and we are committed to keeping our employees and trade unions informed as it progresses.”
The group employs about 3,500 staff across its Glasgow shipyards and nearly 5,000 at Portsmouth, although less than half are directly involved in shipbuilding.
BAE has been coming under pressure from government spending cuts and it is feared there will not be enough work to keep all three sites profitable, with a gap expected between the completion of work on the Queen Elizabeth class aircraft carriers and the start of the Type 26 Global Combat Ship programme for the Royal Navy.
BAE, which has its headquarters in London, is the UK’s main defence supplier, making Astute nuclear-powered submarines, aircraft carriers and fighter jets.
But it has been hit by cuts in government military spending in recent years, which led to a 14% fall in annual sales and left 2011 profits 7% lower at £2bn.
A decision on the future of BAE Systems’ major shipyards is likely to be made before the end of the year and one site may close, its UK chief executive says.
Read more here: BAE boss says shipyard may close
Business secretary says project – which would safeguard 1,300 jobs at Portsmouth shipyard – is ‘not a runner’
Vince Cable has raised doubts over the future of BAE Systems’ historic shipyard at Portsmouth after the business secretary questioned the viability of a £150m project that would guarantee production at the site, and secure 1,300 jobs, beyond 2014.
The long-term existence of the south coast facility is under threat amid a review by BAE of its marine operations, with the 500-year-old yard thought by union and Whitehall sources to be most at risk. The dockyard has no orders beyond 2014, when it finishes work on the aircraft carriers HMS Queen Elizabeth and HMS Prince of Wales, which has led to support for a £150m proposal to build two offshore patrol vessels, filling any construction gap.
Cable told the Guardian that the project, backed by the Conservative MP for Portsmouth North, Penny Mordaunt, is “not a runner”. He said: “I don’t think it’s a runner. It would only be a runner if there was a demand from the armed services.”
Referring to speculation about the yard’s future, he said: “An announcement has not been made by BAE but most people are assuming that there is a difficult period ahead.” The Ministry of Defence said the Royal Navy’s equipment plan “does not include any offshore patrol vessels”. “We continue to work closely with the company, who are exploring how best to sustain their shipbuilding capability in the future,” it said.
Cable’s Department for Business, Innovation and Skills is involved in the development of the marine industry on the south coast after awarding £15m to two projects last month from the government’s regional growth fund. The award includes grants for small and medium sized businesses in the Portsmouth area. “There is a lot of interest in developing Portsmouth’s capabilities for the marine industry in general,” said Cable. “The facilities currently used for shipbuilding could be utilised for a wider range of marine technologies.”
Cable added that while there is still a possibility that shipbuilding will continue at the 500-year-old yard, the local enterprise partnership – a group of local authorities and businesses – is looking at new uses for the site. “It is possible that they may have other boats that they want to build there and that may be extremely good news, but the LEP and the county council are thinking hard about developing alternatives and we are supporting them in that.”
BAE, which supported the regional growth fund bids, said it was still in discussions with the Ministry of Defence over the Royal Navy’s warship programme. The next major project is the Type 26 global combat ship, which is for the Royal Navy but will also target export markets. There has been speculation that the work will go to two BAE yards on the river Clyde in Glasgow, leaving BAE’s Portsmouth facility with no work beyond 2014 and the prospect of closure. However, a further 1,500 BAE staff would still be employed at the Royal Navy base in Portsmouth to work on services, maintenance and upgrades of the Royal Navy ships based there. BAE leases the manufacturing site, which sits on the naval base, from the Royal Navy.
A forthcoming referendum on Scottish independence in 2014 is also viewed as a complicating factor because the MoD has indicated that the Type 26 will be built in the UK. In August the shadow defence secretary and MP for East Renfrewshire in Scotland, Jim Murphy, warned that a vote for independence would cost thousands of jobs at the BAE yards in Govan and Scotstoun. “If we leave the UK, we leave the Royal Navy and lose its order book,” he said.
BAE said: “We continue to work closely with the Ministry of Defence to explore all possible options to determine how best to sustain the capability to deliver complex warships in the UK in the future. This work is ongoing and we are committed to keeping our employees and trade unions informed as it progresses.”
Under the terms of a 2009 agreement with the MoD, BAE is guaranteed shipbuilding and naval support work over a 15-year period, although the agreement also sets cost savings targets that must be achieved by the UK’s largest defence contractor. BAE is drawing up a construction strategy for the Type 26, which will include the locations where the ship will be built. BAE is scaling back its UK operations as the £37bn UK defence budget is reduced by 8% by 2014.
It has announced plans to cut 2,000 jobs at its aerospace division and in May said it was cutting a further 620 jobs at various sites including the Armstrong factory in Newcastle upon Tyne, which has been a defence industry site since 1847.
However, such is the scale of the carrier programme, observers say BAE would have struggled to maintain its shipbuilding operations at the same level once the multibillion-pound project is completed.
Invesco Perpetual demands resignation of Dick Olver and senior independent director Sir Peter Mason
BAE Systems says it remains “fully supportive” of its directors after receiving a letter from its largest shareholder demanding the resignation of the chairman, Dick Olver, and the senior independent director Sir Peter Mason.
Invesco Perpetual, which controls 13.3% of BAE shares, was joined in its call by two other institutional investors, understood to be Artemis and Henderson. The trio argue “significant change” is needed in the boardroom after the collapse of BAE’s attempt to merge with aerospace giant EADS.
BAE said it intends to stick with its plan for Olver, chairman since 2004, to depart in 2014 and claimed most shareholders are supportive. “The company is aware that a minority of its institutional investors have recently made public their own views on board succession planning, which differ widely from those of the board and the majority of the company’s principal shareholders,” it said.
The row came as a senior executive at Airbus, owned by EADS, said BAE and the Franco-German group have missed the “last opportunity” for consolidation in the European defence and aerospace sector.
Günter Butschek, chief operating officer at Airbus, said the maker of the A380 and A320 planes would now focus elsewhere, indicating that the failed €34.5bn (£28bn) merger between the UK’s largest defence contractor and the European industrial conglomerate would not be revived.
“We have missed an opportunity, possibly the last opportunity to consolidate on a European level. It is a critically important industry for Europe … The world will still spin and we are re-focusing on new opportunities,” said Butschek. The A350 will carry up to 350 passengers and is a European manufacturing project, with wings made in the UK, a fuselage built in Hamburg, Germany, and final assembly at the Airbus headquarters in Toulouse, France.
The merger would have lessened BAE’s reliance on UK defence and EAD’s on civil aerospace, giving the Airbus maker access to the US defence market and reintegrating BAE with Airbus – the arms firm sold a 20% stake in the superjumbo maker in 2006.
Speaking in Toulouse at the inauguration of the final assembly line for the long-distance A350 plane, Butschek said Airbus “doesn’t have any need to change our industrial footprint”, referring to the company’s pan-European manufacturing strategy. Because Airbus has no advanced plans for an entirely new plane, Butschek said, there is no need for a decision on the location of future Airbus work.
“As long as the decisions are not made [about next generation programmes] there is no need to decide on the allocation of the work package,” said Butschek. However, the A350 carries an additional boost to UK manufacturing: it uses Trent XWB engines made by Derby-based Rolls-Royce.
The UK accounts for around 15% of all Airbus manufacturing – and the company has a workforce of 10,000 in Britain, largely at its wing manufacturing plant in Broughton, north Wales, and at its design and testing facility in Filton near Bristol.
The company’s wide production footprint is a legacy of its complex origins as a combination of aerospace manufacturers. EADS, the Airbus parent, is controlled by the French and German governments, who control 22.35% each of the business through direct and indirect shareholdings. Concerns over their influence in a combined BAE/EADS helped scupper the deal, with the German chancellor, Angela Merkel, considered the most implacable obstacle.
The Airbus chief executive, Fabrice Brégier, indicated that the company will focus on emerging markets such as China and increasing its presence in the largest aerospace market, the US, where it recently announced plans for a factory in Alabama. “I am disappointed that EADS-BAE couldn’t happen. It would have created a fantastic leader in both commercial aerospace and defence and this would have contributed to a more balanced group,” said Brégier.
“However, Airbus didn’t expect any industrial synergies so what counts is our market, is our international development, in China, in the United States. So it has no impact on the business and the people of Airbus.”
The A350 order book – with more than 550 orders so far – indicates the growth trajectory of the international airline market, with Qatar Airways the biggest customer, alongside orders from Air China, Singapore Airlines, Abu Dhabi-based Etihad, and Vietnam Airlines. By comparison, the Airbus A380 superjumbo has had 253 orders so far. According to Airbus, the Asia-Pacific region will account for 35% of new aircraft deliveries over the next 20 years, with China overtaking the US as the world’s largest domestic airline market from 2031.
The first A350, a test aircraft, will take to the air in mid-2013 with the first delivery to Qatar taking place in the second half of 2014. The A350′s carbon fibre fuselage helps make it 25% more fuel-efficient than its counterparts that are in operation currently. The entire A350 programme will cost around €11bn. Airbus hopes to complete 10 A350s a month by 2018. The Toulouse facility, the size of nearly 300 tennis courts, has been named after Roger Béteille, the Airbus technical director who oversaw the first Airbus aircraft, the A300.
The A350 comes in three versions: the 270-seater A350-800; the 314 seat A350-900 and the 350 seat A350-1000.
Neil Woodford at Invesco Perpetual wants Dick Olver out – will the award-winning chairman be able to dig in?
The curse of the award strikes again. Guess who picked up top prize in the annual Non-Executive Director Awards (yes, they really exist) in March? It was Dick Olver, chairman of BAE, whose advice to the assembled worthies was to “lead extraordinary change”.
Change is what BAE needs, extraordinarily quickly, thinks the company’s largest shareholder. Neil Woodford at Invesco Perpetual wants Olver out, plus the company’s senior independent director, Sir Peter Mason. Woodford usually gets his way (just ask David Brennan, departed chief executive of AstraZeneca) and his fund’s 13.3% shareholding represents a big obstacle to Olver’s ambition of leaving in May 2014 after a decade at the helm.
Olver clearly wants to try. BAE’s position is that “the majority of the company’s principal shareholders” are supportive. We’ll see if that statement looks robust in, say, a fortnight’s time. If it does, Olver may be able to dig in. If not, it’s surely game over.
Woodford’s only wingmen at the moment are Artemis and Henderson.
One purpose of their joint letter to the board, it would seem, was to encourage undecided shareholders to make up their minds.
Three or four big-name recruits to the cause would probably be enough. Few chairmen can survive if opposition to their presence passes 20%.
Olver’s main problem is that he can’t point to many recent successes.
He’s been at the helm for eight years but the share price currently stands at 2005 levels, depressed in part by the perception that BAE overpaid when buying United Defense Industries and Armor Holdings in the US.
Those deals, and the sale in 2006 of the 20% stake in Airbus, set the company’s course towards the US defence industry. But last month’s proposal to merge with EADS was a belated embrace of the civilian market and Europe. Strategic confusion or free-thinking opportunism? That’s one debate. Another is whether the opportunity ever really existed. The deal collapsed because of politics in Berlin but could have been felled by any number of other hurdles – not least the opposition of Woodford himself. Add it all up, and Olver’s chances of staying until 2014 look about 50-50.
Here’s a view from an undeclared shareholder: “The company is at a crossroads. In those circumstances, it is often helpful to have a change at the top.” Olver has his work cut out.
A group of leading shareholders in BAE Systems call on the chairman and a senior director to resign following the failed plan to merge with EADS.
Read more: BAE investors want boss to leave