ALEXANDER CAMPBELL / LONDON
Nimrod and submarine programme hitches cause wobbles
BAE Systems' shares lost almost half their value last week after the company revealed further delays in two key programmes.
The Nimrod MRA4 maritime patrol aircraft and the Astute-class submarine, both well behind schedule, are to slip again. The company gave no reason for the delays and has not said by how much they will slide. BAE announced in August that Astute's in-service date would slip by 18 months, from June 2005 to late 2006. Nimrod had already been delayed by two years due to BAE's move to take back rebuild work from subcontractors in 1999. The first aircraft was rolled out in August and was due to fly by the end of the year, but BAE revealed in October that this had slipped to the second half of next year because of wing structure problems.
Analysts expect the company to take at least two months to renegotiate its contracts with the UK Ministry of Defence, which has already ruled out any more cash for the company. "BAE is between a rock and a hard place," says one analyst, pointing out that the UK government insists on keeping factories open for political reasons, but - unlike France and the USA - does not protect its national industry against foreign competition. "Co-operation between [BAE] and the government has become strained," he added.
Although BAE Systems believes its UK ownership gives it the edge over French rival Thales in the UK CVF carrier competition, this latest development could seriously damage its chances of landing the £3 billion ($4.5 billion) contract (Flight International, 10-16 December).
Source: Flight International
