Chris Jasper/LONDON
BAE Systems' purchase of Lockheed Martin's Aerospace Electronics Systems (AES) business is likely to be its last significant move in the USA before it attempts a major transatlantic deal. Meanwhile, the UK giant has finalised a contract with Boeing which will see it undertake more aerostructures work for the US company, despite its own holding in Airbus.
BAE chief executive John Weston says it will focus on absorbing both AES, with its Sanders electronic warfare business, and Lockheed Martin Control Systems, purchased in April, rather than targeting further bolt-on US acquisitions. "We want to settle it down," he says.
The $1.67 billion purchase of AES (beating Northrop Grumman), makes BAE the largest defence company in the world by some parameters, with BAE Systems North America now a major player in its own right. Describing the takeover as "a great milestone in the consolidation of the industry", Weston says it is important because so much US procurement is tied to existing programmes, on which Sanders is a contractor.
Weston adds that AES will be folded into BAE's North American business and claims a special security agreement governing the operation of the latter (inherited via Marconi Electronic Systems) can be adapted to allay security concerns over AES. He adds: "In the lead-up to the deal the US Department of Defense did not suggest there were problems."
Weston believes developments over the last six months augur well for an easing up of restrictions on transatlantic defence moves, citing a positive meeting between the UK and US defence ministers in Munich and the exemption of the UK from Washington's International Traffic in Arms Regulations.
The Boeing deal will see BAE Aerostructures' Prestwick plant provide leading and trailing wing edges for 767s, in addition to 777s. The deal, which may be extended to the 757, could in turn see Malaysia's SME Aerospace supply 767 components to BAE.
Source: Flight International
