Mid-year launch for new unit to be coupled with cutbacks in European joint-ventures
BAE Systems is to launch a new defence electronics division by mid-year, comprising elements of its aborted EuroSystems joint venture with Finmeccanica. The move comes as the group seeks to scale back its involvement in European joint ventures.
BAE-owned elements of AMS will be merged with the company's existing command, control, computer, communications, intelligence, surveillance and reconnaissance (C4ISR) units, into a new as-yet unnamed entity.
Chris Geoghegan, BAE Systems chief operating officer, says the separation will be relatively straightforward, as "in reality there has been very little integration during the life of the joint venture". The new unit will focus on the high-level system integration needs of the UK military, and on securing export orders, he adds.
The company released strong figures last week for the year ending December 2004. Underlying pre-tax profits rose by 3% to just over £1 billion ($1.92 billion). Mike Turner, BAE Systems group chief executive, says the company has moved "from a position of recovery to a position of strength".
Turner says the strategic aim is still to grow the company's North American divisions, through organic growth and acquisition. Coupled with this is the desire to exit from some European joint ventures, with the company deciding to reduce its stake in Saab from 35% to 20% and to scale back its involvement in their Gripen International marketing operation.
A further sell-off has been ruled out. "The 20% share gives us two seats on the board, which is important to meet our support obligations [for existing Gripen customers such as South Africa]," he says.
Turner also rules out suggestions that BAE wants to sell its 20% share of Airbus to concentrate on the defence market.
"We have no plans currently and until we can see a better return on our funds, why would you want to sell?" Turner says.
Turner is repeating calls for an umbrella technology transfer agreement between the UK and US governments to ease difficulties it faces with Lockheed Martin F-35 Joint Strike Fighter maintenance contracts.
JUSTIN WASTNAGE / LONDON
Source: Flight International
