BAE Systems is facing the prospect of continuing large losses from its ailing regional aircraft division for the next seven years.
The regional division is likely to cost the company around £100 million ($186 million) in 2006, taking into account cost provisions to keep the support business going, says chief financial officer George Rose. BAE has already seen a £46 million loss in the division in the first half of 2006.
"It's a lifetime's work," BAE chief executive Mike Turner says. He estimates that the ongoing cost of supporting the regional fleet is likely to remain stable until BAE's commitment to it ends in 2013.
There have been some positive developments in the regional aircraft division: BAE says it has managed to cancel residual value guarantees on 37 aircraft, which represented "significant future exposures" for the division. The company sees opportunities for turboprop and jet aircraft continuing to emerge in Eastern Europe and India but overall, "no improvement is anticipated in this market".
Source: Flight International
