BAE Systems plc (BAE) is a British
multinational arms
Arms or ARMS may refer to:
*Arm or arms, the upper limbs of the body
Arm, Arms, or ARMS may also refer to:
People
* Ida A. T. Arms (1856–1931), American missionary-educator, temperance leader
Coat of arms or weapons
*Armaments or weapons
**Fi ...
,
security" \n\n\nsecurity.txt is a proposed standard for websites' security information that is meant to allow security researchers to easily report security vulnerabilities. The standard prescribes a text file called \"security.txt\" in the well known locat ...
, and
aerospace
Aerospace is a term used to collectively refer to the atmosphere and outer space. Aerospace activity is very diverse, with a multitude of commercial, industrial and military applications. Aerospace engineering consists of aeronautics and astr ...
company based in
London
London is the capital and List of urban areas in the United Kingdom, largest city of England and the United Kingdom, with a population of just under 9 million. It stands on the River Thames in south-east England at the head of a estuary dow ...
, England. It is the largest defence contractor in
Europe
Europe is a large peninsula conventionally considered a continent in its own right because of its great physical size and the weight of its history and traditions. Europe is also considered a subcontinent of Eurasia and it is located entirel ...
, and ranked the seventh-largest in the world based on applicable 2021 revenues. As of 2017, it is the biggest manufacturer in Britain.
Its largest operations are in the United Kingdom and United States, where its
BAE Systems Inc.
BAE Systems Inc. (formerly BAE Systems North America) is an American subsidiary of British defense, security, and aerospace company BAE Systems plc. The American subsidiary operates under a Special Security Agreement which allows it to work o ...
subsidiary is one of the six largest suppliers to the
US Department of Defense
The United States Department of Defense (DoD, USDOD or DOD) is an executive branch department of the federal government charged with coordinating and supervising all agencies and functions of the government directly related to national sec ...
. Other major markets include Australia, Canada, Japan, India, Saudi Arabia, Turkey, Qatar, Oman and Sweden, where Saudi Arabia is regularly among its top three sources of revenue.
The company was formed on 30 November 1999 by the
£7.7 billion purchase of and merger with
Marconi Electronic Systems
Marconi Electronic Systems (MES), or GEC-Marconi as it was until 1998, was the defence arm of General Electric Company (GEC). It was demerged from GEC and bought by British Aerospace (BAe) on 30 November 1999 to form BAE Systems. GEC then renam ...
(MES), the defence electronics and naval shipbuilding subsidiary of the
General Electric Company plc
The General Electric Company (GEC) was a major British industrial conglomerate involved in consumer and defence electronics, communications, and engineering. The company was founded in 1886, was Britain's largest private employer with over 25 ...
(GEC), by
British Aerospace
British Aerospace plc (BAe) was a British aircraft, munitions and defence-systems manufacturer. Its head office was at Warwick House in the Farnborough Aerospace Centre in Farnborough, Hampshire. Formed in 1977, in 1999 it purchased Marcon ...
, an aircraft, munitions and naval systems manufacturer.
BAE is the successor to various aircraft, shipbuilding, armoured vehicle, armaments and defence electronics companies. These include The
Marconi Company
The Marconi Company was a British telecommunications and engineering company that did business under that name from 1963 to 1987. Its roots were in the Wireless Telegraph & Signal Company founded by Italian inventor Guglielmo Marconi in 189 ...
, the first commercial company devoted to the development and use of radio;
A.V. Roe and Company
AVRO, short for Algemene Vereniging Radio Omroep ("General Association of Radio Broadcasting"), was a Dutch public broadcasting association operating within the framework of the Nederlandse Publieke Omroep system. It was the first public broa ...
, one of the world's first aircraft companies;
de Havilland, manufacturer of the
Comet
A comet is an icy, small Solar System body that, when passing close to the Sun, warms and begins to release gases, a process that is called outgassing. This produces a visible atmosphere or coma, and sometimes also a tail. These phenomena ...
, the world's first commercial jet airliner;
Hawker Siddeley, manufacturer of the
Harrier, the world's first VTOL attack aircraft;
British Aircraft Corporation, co-manufacturer of the
Concorde
The Aérospatiale/BAC Concorde () is a retired Franco-British supersonic airliner jointly developed and manufactured by Sud Aviation (later Aérospatiale) and the British Aircraft Corporation (BAC).
Studies started in 1954, and France an ...
supersonic transport;
Supermarine
Supermarine was a British aircraft manufacturer that is most famous for producing the Spitfire fighter plane during World War II as well as a range of seaplanes and flying boats, and a series of jet-powered fighter aircraft after World War II ...
, manufacturer of the
Spitfire
The Supermarine Spitfire is a British single-seat fighter aircraft used by the Royal Air Force and other Allied countries before, during, and after World War II. Many variants of the Spitfire were built, from the Mk 1 to the Rolls-Royce Grif ...
;
Yarrow Shipbuilders
Yarrow Shipbuilders Limited (YSL), often styled as simply Yarrows, was a major shipbuilding firm based in the Scotstoun district of Glasgow on the River Clyde. It is now part of BAE Systems Surface Ships, owned by BAE Systems, which has also op ...
, builder of the
Royal Navy
The Royal Navy (RN) is the United Kingdom's naval warfare force. Although warships were used by English and Scottish kings from the early medieval period, the first major maritime engagements were fought in the Hundred Years' War against ...
's
first destroyers;
Fairfield Shipbuilding and Engineering Company
The Fairfield Shipbuilding and Engineering Company, Limited was a Scottish shipbuilding company in the Govan area on the Clyde in Glasgow. Fairfields, as it is often known, was a major warship builder, turning out many vessels for the Royal Navy ...
, builder of the world's first
battlecruiser; and
Vickers Shipbuilding and Engineering
Vickers Shipbuilding and Engineering, Ltd (VSEL) was a shipbuilding company based at Barrow-in-Furness, Cumbria in northwest England that built warships, civilian ships, submarines and armaments. The company was historically the Naval Construct ...
, builder of the Royal Navy's first
submarines.
Since its formation in 1999, BAE has made a number of acquisitions, most notably of
United Defense
United Defense Industries (UDI) was an American defense contractor which became part of BAE Systems Land & Armaments after being acquired by BAE Systems in 2005. The company produced combat vehicles, artillery, naval guns, missile launchers an ...
and
Armor Holdings
Armor Holdings, Inc. was an American manufacturer of military, law enforcement, and personnel safety equipment. It was acquired by BAE Systems on July 31, 2007 and renamed BAE Systems Mobility & Protection Systems. The divisions have been reorgani ...
of the United States, and sold its shares in
Airbus
Airbus SE (; ; ; ) is a European multinational aerospace corporation. Airbus designs, manufactures and sells civil and military aerospace products worldwide and manufactures aircraft throughout the world. The company has three divisions: ' ...
,
Astrium
Astrium was an aerospace manufacturer subsidiary of the European Aeronautic Defence and Space Company (EADS) that provided civil and military space systems and services from 2006 to 2013. In 2012, Astrium had a turnover of €5.8 billion and 1 ...
,
AMS and
Atlas Elektronik
Atlas Elektronik is a naval/marine electronics and systems business based in Bremen, Germany. It is involved in the development of integrated sonar systems for submarines and heavyweight torpedoes.
The company was a subsidiary of BAE System ...
. It is involved in several major defence projects, including the
Lockheed Martin F-35 Lightning II
The Lockheed Martin F-35 Lightning II is an American family of single-seat, single-engine, all-weather Stealth aircraft, stealth multirole combat aircraft that is intended to perform both Air superiority fighter, air superiority and attack ...
, the
Eurofighter Typhoon
The Eurofighter Typhoon is a European multinational twin-engine, canard delta wing, multirole fighter. The Typhoon was designed originally as an air-superiority fighter and is manufactured by a consortium of Airbus, BAE Systems and Leonardo ...
, the , and the s. BAE Systems is listed on the
London Stock Exchange
London Stock Exchange (LSE) is a stock exchange in the City of London, England, United Kingdom. , the total market value of all companies trading on LSE was £3.9 trillion. Its current premises are situated in Paternoster Square close to St P ...
's
FTSE 100 Index.
History
Heritage
![Spitfire VII Langley USA](https://upload.wikimedia.org/wikipedia/commons/b/be/Spitfire_VII_Langley_USA.jpg)
BAE Systems was formed on 30 November 1999, by the £7.7 billion acquisition of
Marconi Electronic Systems
Marconi Electronic Systems (MES), or GEC-Marconi as it was until 1998, was the defence arm of General Electric Company (GEC). It was demerged from GEC and bought by British Aerospace (BAe) on 30 November 1999 to form BAE Systems. GEC then renam ...
(MES) by
British Aerospace
British Aerospace plc (BAe) was a British aircraft, munitions and defence-systems manufacturer. Its head office was at Warwick House in the Farnborough Aerospace Centre in Farnborough, Hampshire. Formed in 1977, in 1999 it purchased Marcon ...
.
As a result, BAE Systems is the successor to many of the most famous British aircraft, defence electronics and warship manufacturers. Predecessor companies built the
Comet
A comet is an icy, small Solar System body that, when passing close to the Sun, warms and begins to release gases, a process that is called outgassing. This produces a visible atmosphere or coma, and sometimes also a tail. These phenomena ...
, the world's first commercial jet airliner; the
Harrier "jump jet", the world's first operational
vertical/short take-off and landing (VTOL) aircraft; the "groundbreaking" Blue Vixen radar carried by
Sea Harrier FA2s and which formed the basis of the Eurofighter's
CAPTOR radar; and co-produced the
Concorde
The Aérospatiale/BAC Concorde () is a retired Franco-British supersonic airliner jointly developed and manufactured by Sud Aviation (later Aérospatiale) and the British Aircraft Corporation (BAC).
Studies started in 1954, and France an ...
supersonic airliner with
Aérospatiale.
British Aerospace was a civil and
military aircraft
A military aircraft is any fixed-wing or rotary-wing aircraft that is operated by a legal or insurrectionary armed service of any type. Military aircraft can be either combat or non-combat:
* Combat aircraft are designed to destroy enemy equi ...
manufacturer, as well as a provider of military land systems. The company had emerged from the massive consolidation of UK aircraft manufacturers since World War II. British Aerospace was formed on 29 April 1977, by the nationalisation and merger of The
British Aircraft Corporation (BAC), the
Hawker Siddeley Group and
Scottish Aviation
Scottish Aviation Limited was an aircraft manufacturer based at Prestwick, Scotland.
History
The company was founded in 1935. Originally a flying school operator, the company took on maintenance work in 1938.
During the Second World War, Scott ...
.
Both BAC and Hawker Siddeley were themselves the result of various mergers and acquisitions.
[ (Click on Air tab.)]
Marconi Electronic Systems was the defence subsidiary of British engineering firm the
General Electric Company (GEC), dealing largely in military
systems integration
System integration is defined in engineering as the process of bringing together the component sub-systems into one system (an aggregation of subsystems cooperating so that the system is able to deliver the overarching functionality) and ensuring ...
, as well as naval and land systems. Marconi's heritage dates back to
Guglielmo Marconi's Wireless Telegraph & Signal Company, founded in 1897. GEC purchased
English Electric (which included Marconi) in 1968 and thereafter used the Marconi brand for its defence businesses (as GEC-Marconi and later Marconi Electronic Systems). GEC's own defence heritage dates back to World War I, when its contribution to the war effort included radios and bulbs. World War II consolidated this position, as the company was involved in important technological advances, notably the
cavity magnetron
The cavity magnetron is a high-power vacuum tube used in early radar systems and currently in microwave ovens and linear particle accelerators. It generates microwaves using the interaction of a stream of electrons with a magnetic field whi ...
for
radar
Radar is a detection system that uses radio waves to determine the distance ('' ranging''), angle, and radial velocity of objects relative to the site. It can be used to detect aircraft, ships, spacecraft, guided missiles, motor vehicles, we ...
. Between 1945 and 1999, GEC-Marconi/Marconi Electronic Systems became one of the world's most important
defence contractor
The arms industry, also known as the arms trade, is a global industry which manufactures and sells weapons and military technology. It consists of a commercial industry involved in the research and development, engineering, production, and ser ...
s. GEC's major defence related acquisitions included
Associated Electrical Industries in 1967,
Yarrow Shipbuilders
Yarrow Shipbuilders Limited (YSL), often styled as simply Yarrows, was a major shipbuilding firm based in the Scotstoun district of Glasgow on the River Clyde. It is now part of BAE Systems Surface Ships, owned by BAE Systems, which has also op ...
in 1985,
Plessey
The Plessey Company plc was a British electronics, defence and telecommunications company. It originated in 1917, growing and diversifying into electronics. It expanded after World War II by acquisition of companies and formed overseas compani ...
companies in 1989,
parts of
Ferranti
Ferranti or Ferranti International plc was a UK electrical engineering and equipment firm that operated for over a century from 1885 until it went bankrupt in 1993. The company was once a constituent of the FTSE 100 Index.
The firm was known ...
's defence business in 1990,
the rump of
Ferranti
Ferranti or Ferranti International plc was a UK electrical engineering and equipment firm that operated for over a century from 1885 until it went bankrupt in 1993. The company was once a constituent of the FTSE 100 Index.
The firm was known ...
when it went into receivership in 1993/1994,
Vickers Shipbuilding and Engineering
Vickers Shipbuilding and Engineering, Ltd (VSEL) was a shipbuilding company based at Barrow-in-Furness, Cumbria in northwest England that built warships, civilian ships, submarines and armaments. The company was historically the Naval Construct ...
in 1995 and
Kværner Govan in 1999. In June 1998, MES acquired
Tracor
Tracor was a major North American defense electronics contractor which was acquired by Marconi Electronic Systems (MES), a subsidiary of General Electric Company plc, in 1998. Following the purchase of MES by British Aerospace in November 1999 ...
, a major American defence contractor, for £830 million (approx. US$1.4 billion c. 1998).
Formation
The 1997 merger of American corporations
Boeing
The Boeing Company () is an American multinational corporation that designs, manufactures, and sells airplanes, rotorcraft, rockets, satellites, telecommunications equipment, and missiles worldwide. The company also provides leasing and p ...
and
McDonnell Douglas
McDonnell Douglas was a major American aerospace manufacturing corporation and defense contractor, formed by the merger of McDonnell Aircraft and the Douglas Aircraft Company in 1967. Between then and its own merger with Boeing in 1997, it pro ...
, which followed the forming of
Lockheed Martin, the world's largest defence contractor in 1995, increased the pressure on European defence companies to consolidate. In June 1997 British Aerospace Defence managing director
John Weston commented "Europe ... is supporting three times the number of contractors on less than half the budget of the U.S." European governments wished to see the merger of their defence manufacturers into a single entity, a "European Aerospace and Defence Company".
As early as 1995 British Aerospace and the German aerospace and defence company
DaimlerChrysler Aerospace
''Dasa'' ( sa, दास, Dāsa) is a Sanskrit word found in ancient Indian texts such as the ''Rigveda'' and ''Arthasastra''. It usually means "enemy" or "servant" but ''dasa'', or ''das'', also means a " servant of God", "devotee," " votary" or ...
(DASA) were said to be keen to create a transnational aerospace and defence company. The two companies envisaged including Aérospatiale, the other major European aerospace company, but only after its privatisation. The first stage of this integration was seen as the transformation of Airbus from a consortium of British Aerospace, DASA, Aérospatiale and
Construcciones Aeronáuticas SA into an integrated company; in this aim British Aerospace and DASA were united against the various objections of Aérospatiale.
As well as Airbus, British Aerospace and DASA were partners in the
Panavia Tornado
The Panavia Tornado is a family of twin-engine, variable-sweep wing multirole combat aircraft, jointly developed and manufactured by Italy, the United Kingdom and West Germany. There are three primary Tornado variants: the Tornado IDS ( in ...
and Eurofighter Typhoon aircraft projects. Merger discussions began between British Aerospace and DASA in July 1998, just as French participation became more likely with the announcement that Aérospatiale was to merge with
Matra
Matra (an acronym for Mécanique Aviation Traction) was a French industrial conglomerate. During its years of operation, it was engaged in a wide range of business activities, primarily focused around automobiles, bicycles, aeronautics and w ...
and emerge with a diluted French government shareholding. A merger was agreed between British Aerospace chairman
Richard Evans and DASA CEO
Jürgen Schrempp
Jürgen or Jurgen is a popular masculine given name in Germany, Estonia, Belgium and the Netherlands. It is cognate with George. Notable people named Jürgen include:
A
* Jürgen Ahrend (born 1930), German organ builder
*Jürgen Alzen (born 1 ...
.
Meanwhile, GEC was also under pressure to participate in defence industry consolidation. Reporting the appointment of George Simpson as GEC managing director in 1996, ''The Independent'' said "some analysts believe that Mr Simpson's inside knowledge of BAe, a long-rumoured GEC bid target, was a key to his appointment. GEC favours forging a national 'champion' defence group with BAe to compete with the giant US organisations." When GEC put MES up for sale on 22 December 1998, British Aerospace abandoned the DASA merger in favour of purchasing its British rival. The merger of British Aerospace and MES was announced on 19 January 1999. Evans stated that in 2004 that his fear was that an American defence contractor would acquire MES and challenge both British Aerospace and DASA.
The merger created a
vertically integrated
In microeconomics, management and international political economy, vertical integration is a term that describes the arrangement in which the supply chain of a company is integrated and owned by that company. Usually each member of the supply ...
company which ''The Scotsman'' described as "
combination of British Aerospace'scontracting and platform-building skills with Marconi's coveted electronics systems capability", for example combining the manufacturer of the Eurofighter with the company that provided many of the aircraft's electronic systems; British Aerospace was MES' largest customer. In contrast, DASA's response to the breakdown of the merger discussion was to merge with
Aérospatiale to create the European Aeronautic Defence and Space Company (
EADS), a
horizontal integration
Horizontal integration is the process of a company increasing production of goods or services at the same part of the supply chain. A company may do this via internal expansion, acquisition or merger.
The process can lead to monopoly if a c ...
.
Seventeen undertakings were given by BAE Systems to the
Department of Trade and Industry which prevented a reference of the merger to the
Monopolies and Mergers Commission
The Competition Commission was a non-departmental public body responsible for investigating mergers, markets and other enquiries related to regulated industries under competition law in the United Kingdom. It was a competition regulator unde ...
. These were largely to ensure that the integrated company would tender sub-contracts to external companies on an equal basis with its subsidiaries. Another condition was the "
firewalling" of former British Aerospace and MES teams on defence projects such as the
Joint Strike Fighter
Joint Strike Fighter (JSF) is a development and acquisition program intended to replace a wide range of existing fighter, strike, and ground attack aircraft for the United States, the United Kingdom, Italy, Canada, Australia, the Netherlands ...
(JSF). In 2007 the government announced it had agreed to release BAE Systems from ten of the undertakings due to "a change in circumstances".
BAE Systems inherited the UK government-owned
"golden" share that was established when British Aerospace was privatised. This unique share prevents amendments of certain parts of the company's
Articles of Association without the permission of the Secretary of State.
These Articles require that no foreign person or persons acting together may hold more than 15% of the company's shares.
2000s
BAE Systems' first annual report identified Airbus, support services to militaries and integrated systems for air, land and naval applications as key areas of growth. It also stated the company's desire to both expand in the US and participate in further consolidation in Europe. BAE Systems described 2001 as an "important year" for its European joint ventures, which were reorganised considerably. The company has described the rationale for expansion in the US; "
tis by far the largest defence market with spend running close to twice that of the Western European nations combined. Importantly, US investment in research and development is significantly higher than in Western Europe." When
Dick Olver
Sir Richard Lake Olver FREng (born 2 January 1947) was the chairman of BAE Systems, one of the world's largest defence contractors.
Biography
Early life
Richard Olver was born on 2 January 1947. He studied at City University London, where he ga ...
was appointed chairman in July 2004 he ordered a review of the company's businesses which ruled out further European acquisitions or joint ventures and confirmed a "strategic bias" for expansion and investment in the US. The review also confirmed the attractiveness of the land systems sector and, with two acquisitions in 2004 and 2005, BAE moved from a limited land systems supplier to the second largest such company in the world. This shift in strategy was described as "remarkable" by the ''
Financial Times
The ''Financial Times'' (''FT'') is a British daily newspaper printed in broadsheet and published digitally that focuses on business and economic current affairs. Based in London, England, the paper is owned by a Japanese holding company, Ni ...
''.
Between 2008 and early 2011 BAE acquired five
cybersecurity
Computer security, cybersecurity (cyber security), or information technology security (IT security) is the protection of computer systems and networks from attack by malicious actors that may result in unauthorized information disclosure, t ...
companies in a shift in strategy to take account of reduced spending by governments on "traditional defence items such as warships and tanks".
In 2000
Matra Marconi Space
Matra Marconi Space (MMS) was a Franco-British aerospace company.
History
Matra Marconi Space was established in 1990 as a joint venture between the space and telecommunication divisions of the Lagardère Group ( Matra Espace) and the GEC ...
, a joint BAE Systems/Matra company, was merged with the space division of DASA to form
Astrium
Astrium was an aerospace manufacturer subsidiary of the European Aeronautic Defence and Space Company (EADS) that provided civil and military space systems and services from 2006 to 2013. In 2012, Astrium had a turnover of €5.8 billion and 1 ...
. On 16 June 2003 BAE sold its 25% share of Astrium for £84 million, however due to the lossmaking status of the company, BAE Systems invested an equal amount for "restructuring". BAE Systems sold its 54% majority share of
BAE Systems Canada
CMC Electronics Inc. (french: CMC Électronique) is a Canadian avionics manufacturer. The company's main manufacturing facility is located in Montreal, Quebec with additional facilities located in Ottawa, Ontario and Sugar Grove, Illinois.
Hi ...
, an electronics company, in April for CA$310 (approx. £197 million as of December 2010).
In November 2001, the company announced the closure of the Avro Regional Jet (
Avro RJ) production line at
Woodford Woodford may refer to:
Places
Australia
*Woodford, New South Wales
*Woodford, Queensland, a town in the Moreton Bay Region
*Woodford, Victoria
Canada
* Woodford, Ontario
England
*Woodford, Cornwall
* Woodford, Gloucestershire
*Woodford, Greate ...
and the cancellation of the Avro RJX, an advanced series of the aircraft family, as the business was "no longer viable". The final Avro RJ to be completed became the last British civil airliner. In November 2001 BAE sold its 49.9% share of
Thomson Marconi Sonar to Thales for £85 million.
A further step of European defence consolidation was the merger of BAE's share of
Matra BAe Dynamics
Matra BAe Dynamics was formed in August 1996 by merger of half the missile business of Matra Defense of France and BAe Dynamics (a division of British Aerospace) of the UK and was Europe's largest manufacturer of missiles and UAVs.
British Aeros ...
and the missile division of Alenia Marconi Systems (AMS) into
MBDA
MBDA is a European multinational developer and manufacturer of missiles.[MBDA Inc. US Division Co ...](_blank)
in December. MBDA thus became the world's second largest missile manufacturer. Although EADS (now
Airbus SE
Airbus SE (; ; ; ) is a European multinational aerospace corporation. Airbus designs, manufactures and sells civil and military aerospace products worldwide and manufactures aircraft throughout the world. The company has three divisions: '' ...
) was later reported to be interested in acquiring full control of MBDA, BAE said that, unlike Airbus, MBDA is a "core business".
![Astute2cropped](https://upload.wikimedia.org/wikipedia/commons/0/0b/Astute2cropped.jpg)
In June 2002, BAE Systems confirmed it was in takeover discussions with
TRW, an American aerospace, automotive and defence business. This was prompted by
Northrop Grumman
Northrop Grumman Corporation is an American multinational aerospace and defense technology company. With 90,000 employees and an annual revenue in excess of $30 billion, it is one of the world's largest weapons manufacturers and military techn ...
's £4.1 billion (approx. US$6 billion c. 2002) hostile bid for TRW in February 2002. A bidding war between BAE Systems, Northrop and
General Dynamics ended on 1 June when Northrop's increased bid of £5.1 billion was accepted. On 11 December 2002, the company issued a shock profit warning due to cost overruns of the
Nimrod MRA4 maritime reconnaissance/attack aircraft and the projects. On 19 February 2003 BAE took a charge of £750 million against these projects and the
Ministry of Defence (MoD) agreed to pay a further £700 million of the cost. In 2000 the company had taken a £300 million "loss charge" on the Nimrod contract which was expected to cover "all the costs of completion of the current contract". The troubled Nimrod project would ultimately be cancelled as part of the
2010 Strategic Defence and Security Review (SDSR).
The UK government, following a cabinet row described as "one of the most bitter Cabinet disputes over defence contracts since the
Westland helicopter affair in 1985", ordered 20
BAE Hawk
The BAE Systems Hawk is a British single-engine, jet-powered advanced trainer aircraft. It was first flown at Dunsfold, Surrey, in 1974 as the Hawker Siddeley Hawk, and subsequently produced by its successor companies, British Aerospace and B ...
trainer aircraft with 24 options in July 2003 in a deal worth £800 million.
The deal was significant because it was a factor in India's decision to finalise a £1 billion order for 66 Hawks in March 2004.
Also in July 2003 BAE Systems and
Finmeccanica
Leonardo S.p.A., formerly Leonardo-Finmeccanica and originally Finmeccanica, is an Italian multinational company specialising in aerospace, defence and security. Headquartered in Rome, Italy, the company has 180 sites worldwide. It is the eighth ...
announced their intention to set up three joint venture companies, to be collectively known as
Eurosystems
Selex ES was a subsidiary of Finmeccanica S.p.A., active in the electronics and information technology business, based in Italy and the UK, and formed in January 2013, following Finmeccanica's decision to combine its existing SELEX Elsag and S ...
. These companies would have pooled the avionics,
C4ISTAR and communications businesses of the two companies. However the difficulties of integrating the companies in this way led to a re-evaluation of the proposal; BAE Systems' 2004 Annual Report states that "recognising the complexity of the earlier proposed Eurosystems transaction with Finmeccanica we have moved to a simpler model". The main part of this deal was the dissolution of AMS and the establishment of
SELEX Sensors and Airborne Systems
Selex ES was a subsidiary of Finmeccanica S.p.A., active in the electronics and information technology business, based in Italy and the UK, and formed in January 2013, following Finmeccanica's decision to combine its existing SELEX Elsag and ...
; BAE Systems sold its 25% share of the latter to Finmeccanica for €400 million (approx. £270 million c. 2007) in March 2007.
In May 2004, it was reported that the company was considering selling its shipbuilding divisions,
BAE Systems Naval Ships
BAE Systems plc (BAE) is a British multinational arms, security, and aerospace company based in London, England. It is the largest defence contractor in Europe, and ranked the seventh-largest in the world based on applicable 2021 revenues. ...
and
BAE Systems Submarines
BAE Systems Submarines,BAE Systems Submarine Solutions was split out from BAE Systems Marine and operated as such until January 2012. It was named BAE Systems Maritime - Submarines until 2017 before it became BAE Systems Submarines. is a whol ...
. It was understood that General Dynamics wished to acquire the submarine building facilities at
Barrow-in-Furness
Barrow-in-Furness is a port town in Cumbria, England. Historic counties of England, Historically in Lancashire, it was incorporated as a municipal borough in 1867 and merged with Dalton-in-Furness Urban District in 1974 to form the Borough of B ...
, while
VT Group
VT Group is a privately held United States defense and services company, with its origins in a former British shipbuilding group, previously known as Vosper Thornycroft. The British part of VT Group was integrated into Babcock International in t ...
was said to be interested in the remaining yards on the
Clyde Clyde may refer to:
People
* Clyde (given name)
* Clyde (surname)
Places
For townships see also Clyde Township
Australia
* Clyde, New South Wales
* Clyde, Victoria
* Clyde River, New South Wales
Canada
* Clyde, Alberta
* Clyde, Ontario, a tow ...
.
Instead, in 2008 BAE Systems merged its Surface Fleet arm with the shipbuilding operations of VT Group to form
BVT Surface Fleet BVT may refer to:
* The Bobby Van Trust, a group of charities that improve home security in the UK
* BVT Surface Fleet, former name of BAE Systems Maritime – Naval Ships, British naval shipbuilding company
* Bandwidth-variable transponder, a type ...
, an aim central to the British Government's
Defence Industrial Strategy The Defence Industrial Strategy (DIS) is a United Kingdom government policy which was published as a white paper on 15 December 2005. The purpose of the DIS is stated to be to ensure that the UK armed forces are provided with the equipment they requ ...
.
![1BFV01](https://upload.wikimedia.org/wikipedia/commons/f/f7/1BFV01.jpg)
On 4 June 2004, BAE Systems outbid General Dynamics for
Alvis Vickers
Alvis PLC was created when United Scientific Holdings plc acquired the Alvis division of the nationalised vehicle manufacturer British Leyland in 1981. United Scientific maintained its own name until 1992 when the group was renamed Alvis plc. ...
, the UK's main manufacturer of armoured vehicles. Alvis Vickers was merged with the company's
RO Defence
BAE Systems Platforms & Services is a wholly owned subsidiary of BAE Systems Inc. and is a large provider of tracked and wheeled armored combat vehicles, naval guns, naval ship repair and modernization, artillery and missile launching systems, a ...
unit to form BAE Systems Land Systems. Recognising the lack of scale of this business compared to General Dynamics, BAE Systems executives soon identified the US defence company
United Defense Industries
United Defense Industries (UDI) was an American defense contractor which became part of BAE Systems Land & Armaments after being acquired by BAE Systems in 2005. The company produced combat vehicles, artillery, naval guns, missile launchers and ...
(UDI), a major competitor to General Dynamics, as a main acquisition target.
On 7 March 2005 BAE announced the £2.25 billion (approx. US$4.2 billion c. 2005) acquisition of UDI. UDI, now
BAE Systems Land and Armaments
BAE Systems Platforms & Services is a wholly owned subsidiary of BAE Systems Inc. and is a large provider of tracked and wheeled armored combat vehicles, naval guns, naval ship repair and modernization, artillery and missile launching systems, ad ...
, manufactures combat vehicles, artillery systems, naval guns, missile launchers and precision guided munitions.
In December 2005, BAE Systems announced the sale of its German naval systems subsidiary, Atlas Elektronik, to
ThyssenKrupp
ThyssenKrupp AG (, ; stylized as thyssenkrupp) is a German industrial engineering and steel production multinational conglomerate. It is the result of the 1999 merger of Thyssen AG and Krupp and has its operational headquarters in Duisburg a ...
and EADS. The ''Financial Times'' described the sale as "cut price" because French company Thales bid €300 million, but was blocked from purchasing Atlas by the German government on national security grounds. On 31 January 2006 the company announced the sale of BAE Systems Aerostructures to
Spirit AeroSystems, Inc.
Spirit AeroSystems Holdings, Inc., based in Wichita, Kansas, is the world's largest first-tier aerostructures manufacturer. The company builds several important pieces of Boeing aircraft, including the fuselage of the 737, portions of the 787 f ...
, having said as early as 2002 that it wished to dispose of what it did not regard as a "core business".
On 18 August 2006 Saudi Arabia signed a contract worth £6 billion to £10 billion for 72 Eurofighter Typhoons, to be delivered by BAE Systems. On 10 September 2006 the company was awarded a £2.5 billion contract for the upgrade of 80
Royal Saudi Air Force
The Royal Saudi Air Force ( ar, الْقُوَّاتُ الْجَوِّيَّةُ الْمَلَكِيَّةْ ٱلسُّعُوْدِيَّة, Al-Quwwat Al-Jawiyah Al-Malakiyah as-Su’udiyah) (RSAF) is the aviation branch of the Saudi Arabia ...
Tornado IDSs. One of BAE Systems' major aims, as highlighted in the 2005 Annual Report, was the granting of increased technology transfer between the UK and the US. The F-35 (JSF) programme became the focus of this effort, with British government ministers such as
Lord Drayson
Paul Rudd Drayson, Baron Drayson (born 5 March 1960), is a British businessman, amateur racing driver and Labour politician. He was Minister of Science in the Department for Business, Innovation and Skills until May 2010, where he replaced I ...
,
Minister for Defence Procurement
The Minister of State for Defence Procurement is, as a Minister of State, a mid-level defence minister in the Ministry of Defence of the British Government. The current incumbent of the post, Conservative MP Alex Chalk, was appointed in October 20 ...
, suggesting the UK would withdraw from the project without the transfer of technology that would allow the UK to operate and maintain F-35s independently. On 12 December 2006, Lord Drayson signed an agreement which allows "an unbroken British chain of command" for operation of the aircraft. On 22 December 2006 BAE received a £947 million contract to provide guaranteed availability of Royal Air Force (RAF) Tornados.
In May 2007 the company announced its subsidiary BAE Systems Inc. was to purchase
Armor Holdings
Armor Holdings, Inc. was an American manufacturer of military, law enforcement, and personnel safety equipment. It was acquired by BAE Systems on July 31, 2007 and renamed BAE Systems Mobility & Protection Systems. The divisions have been reorgani ...
for £2.3 billion (approx. US$4.5 billion c. 2007) and completed the deal on 31 July 2007.
The company was a manufacturer of tactical wheeled vehicles and a provider of vehicle and individual armour systems and survivability technologies.
BAE Systems (and British Aerospace previously) was a technology partner to the McLaren Formula One team from 1996 to December 2007.
The partnership originally focused on McLaren's F1 car's aerodynamics, eventually moving on to carbon fibre techniques, wireless systems and fuel management. BAE Systems' main interest in the partnership was to learn about the high speed build and operations processes of McLaren.
The company announced the acquisition of Tenix Defence, a major Australian defence contractor in January 2008. The purchase was completed on 27 June for A$775 million (£373 million) making BAE Systems Australia that country's largest defence contractor. The MoD awarded BAE Systems a 15-year munitions contract in August 2008 worth up to £3 billion, known as Munition Acquisition Supply Solution (MASS). The contract guaranteed supply of 80% of the UK Armed Forces' ammunition and required BAE to modernise its munitions manufacturing facilities. BAE Systems expanded its intelligence and security business with the £531 million purchase of Detica, Detica Group in July 2008. It continued this strategy with purchases of Danish cyber and intelligence company ETI for approximately $210 million in December 2010, and Norkom, Norkom Group PLC the following month for €217 million. The latter provides counter fraud and anti-money laundering solutions to the global financial services industry where its software assists institutions to comply with regulations on financial intelligence and monitoring.
Airbus shareholding
BAE Systems inherited British Aerospace's share of Airbus Industrie, which consisted of two factories at Broughton, Flintshire, Broughton and Filton. These facilities manufactured wings for the Airbus family of aircraft. In 2001 Airbus was incorporated as Airbus SAS, a Société par actions simplifiée, joint stock company. In return for a 20% share in the new company BAE Systems transferred ownership of its Airbus plants (known as Airbus UK) to the new company.
Despite repeated suggestions as early as 2000 that BAE Systems wished to sell its 20% share of Airbus, the possibility was denied by the company.
However, on 6 April 2006 it was reported that it was indeed to sell its stake, then "conservatively valued" at £2.4 billion.
Due to the slow pace of informal negotiations, BAE Systems exercised its put option which saw investment bank N M Rothschild & Sons, Rothschild appointed to give an independent valuation. Six days after this process began, Airbus announced delays to the Airbus A380, A380 with significant effects on the value of Airbus shares. On 2 June 2006 Rothschild valued the company's share at £1.87 billion, well below its own analysts' and even EADS' expectations. The BAE Systems board recommended that the company proceed with the sale. Shareholders voted in favour and the sale was completed on 13 October. This saw the end of UK-owned involvement in civil airliner production. Airbus Operations Ltd (the former Airbus UK) continues to be the Airbus "Centre of Excellence" for wing production, employing over 9,500.
2010s
In February 2010 BAE Systems announced a £592 million writedown of the former Armor Holdings business following the loss of the Family of Medium Tactical Vehicles contract in 2009. It was outbid by Oshkosh Corporation for the £2.3 billion ($3.7 billion) contract. Land and Armaments had been the "star performer" of BAE Systems' subsidiaries, growing from sales of £482 million in 2004 to £6.7 billion in 2009.
BAE Systems inherited British Aerospace's 35% share of Saab AB, with which it produced and marketed the JAS 39 Gripen, Gripen fighter aircraft. In 2005 it reduced this share to 20.5% and in March 2010 announced its intention to sell the remainder. ''The Times'' stated that the decision brought "to an end its controversial relationship with the Gripen fighter aircraft".
Several of the export campaigns for the aircraft were subject to allegations of bribery and corruption.
The company continued its move into support services in May 2010 with the purchase of the marine support company Atlantic Marine for $352 million.
In September 2010 BAE Systems announced plans to sell the BAE Systems Platform Solutions, Platform Solutions division of BAE Systems Inc., which the ''Financial Times'' estimated could yield as much as £1.3 billion. Despite "considerable expressions of interest", the sale was abandoned in January 2011.
The purchases of s, the ''Astute''-class submarines, and the Type 26 frigates were all confirmed in the 2010 SDSR.
A new generation of nuclear missile submarines, the Dreadnought-class submarine, ''Dreadnought''-class, was ordered in 2016.
BAE Systems sold the regional aircraft leasing and asset management arm of its BAE Systems Regional Aircraft, Regional Aircraft business in May 2011. This unit leases the BAe 146/Avro RJ family, BAe ATP, British Aerospace Jetstream, Jetstream and BAe 748. The company retained the support and engineering activities of the business. In September 2011, BAE Systems began consultation with unions and workers over plans to cut nearly 3,000 jobs, mostly in the company's military aircraft division.
In its 2012 half-year report, the company revealed a 10% decline in revenue in the six months up to 30 June due to falling demand for armaments. In May 2012 the governments of the UK and Saudi Arabia reached an agreement on an arms package which saw a £1.6 billion contract awarded to BAE for the delivery of 55 Pilatus PC-21 and 22 BAE Systems Hawk aircraft. The Sultanate of Oman ordered Typhoon and Hawk aircraft worth £2.5 billion in December 2012.
In September 2012, it was reported that BAE Systems and
EADS had entered merger talks which would have seen BAE shareholders own 40% of the resulting organisation.
On 10 October 2012, the companies said the merger talks had been called off. ''The Guardian'' reported that this was due to the German Government's concern about the "potential size of the French shareholding in the combined company, as well as disagreements over the location of the group's headquarters".
In November 2013, BAE Systems announced that shipbuilding would cease in Portsmouth in 2014 with the loss of 940 jobs, and a further 835 jobs would be lost at Filton, near Bristol, and at the shipyards in Govan, Rosyth, and Scotstoun in Scotland. On 9 October 2014, the company announced the loss of 440 management jobs across the country, with 286 of the job cuts in Lancashire.
In July 2014 it announced the acquisition of US intelligence company Signal Innovations Group Inc. to augment imagery and data analysis technologies in its Intelligence & Security business. In August 2014, BAE was awarded a £248 million contract from the British government to build three new offshore patrol vessels. In October 2014, BAE Systems won a £600 million contract from the MoD to maintain HMNB Portsmouth, Portsmouth naval base for five years. During 2014 BAE Systems acquired US-based cybersecurity firm Silversky for $232.5 million.
During Prime Minister Theresa May's visit to Turkey in January 2017, BAE and Turkish Aerospace Industries, TAI officials signed an agreement, worth about £100 million, for BAE to provide assistance in developing the TAI TFX aircraft.
On 10 October 2017, BAE announced that it would lay off nearly 2,000 out of its approximately 35,000 employees in Britain, mainly due to an order shortage for the Typhoon fighter.
In 2019 BAE Systems sold a 55% share of its UK land business to Rheinmetall. The resultant joint venture (JV), Rheinmetall BAE Systems Land (RBSL), was established in July 2019 following regulatory approval and is headquartered at the existing facility in Telford, Shropshire.
2020s
In August 2020 BAE Systems completed the purchase of United Technologies' military GPS businesses for $1.9 billion and Raytheon Company, Raytheon’s military airborne radios business for $275 million. The sale of these 2 business was a condition of the merger approval which saw their 2 parent companies merge to form Raytheon Technologies.
In November 2020, the MoD announced the award of a 20 year, £2.4 billion munitions contract to BAE. This will see BAE manufacture 39 different munitions for the UK armed forces and supersedes the 2008 MASS contract.
Products
![Royal Navy Type 45 Destroyer HMS Daring MOD 45153705](https://upload.wikimedia.org/wikipedia/commons/c/c9/Royal_Navy_Type_45_Destroyer_HMS_Daring_MOD_45153705.jpg)
BAE Systems plays a significant role in the production of military equipment. In 2017, 98% of BAE Systems' total sales were military related.
It plays important roles in military aircraft production. The company's Typhoon fighter is one of the main front line aircraft of the RAF. The company is a major partner in the F-35 Lightning II programme. Its Hawk advanced jet trainer aircraft has been widely exported. In July 2006, the British government declassified the BAE HERTI, HERTI (High Endurance Rapid Technology Insertion), an Unmanned Aerial Vehicle (UAV) which can navigate autonomously. It is currently developing a sixth-generation jet fighter aircraft for the RAF marketed as the "BAE Systems Tempest, Tempest" along with the MoD, Rolls-Royce Holdings, Rolls-Royce, Leonardo S.p.A. and MBDA. It is intended to enter service from 2035 replacing the Typhoon aircraft in service with the RAF.
BAE Systems Land and Armaments
BAE Systems Platforms & Services is a wholly owned subsidiary of BAE Systems Inc. and is a large provider of tracked and wheeled armored combat vehicles, naval guns, naval ship repair and modernization, artillery and missile launching systems, ad ...
manufactures the M2 Bradley, M2/M3 Bradley fighting vehicle family, the US Navy Advanced Gun System (AGS), M113 armoured personnel carrier, M113 armoured personnel carrier (APC), M109 howitzer, M109 Paladin, Archer Artillery System, Archer, M777 howitzer, the British Army's Challenger 2 tank, Challenger 2, Warrior Tracked Armoured Vehicle, Panther Command and Liaison Vehicle, and the SA80, SA80 assault rifle.
Major naval projects include the ''Astute''-class submarines, Type 26 frigates and ''Dreadnought''-class submarines.
BAE Systems is indirectly engaged in production of nuclear weapons – through its share of MBDA it is involved with the production and support of the Air-Sol Moyenne Portée, ASMP missile, an air-launched nuclear missile which forms part of the Force de frappe, French nuclear deterrent. The company is also the UK's only nuclear submarine manufacturer and thus produces a key element of the United Kingdom's nuclear weapons capability.
Areas of business
BAE Systems defines its "principal markets" to be Australia, Saudi Arabia, the UK and the US.
United Kingdom
BAE Systems is the main supplier to the UK Ministry of Defence (United Kingdom), MoD; in 2009/2010 BAE Systems companies in the list of Top 100 suppliers to the MoD received contracts totalling £3.98 billion, with total revenue being higher when other subsidiary income is included. In comparison, the second largest supplier is Babcock International Group and its subsidiaries, with a revenue of £1.1 billion from the MoD. Oxford Economic Forecasting states that in 2002 the company's UK businesses employed 111,578 people, achieved export sales of £3 billion and paid £2.6 billion in taxes. These figures exclude the contribution of Airbus UK.
After its creation, BAE Systems had a difficult relationship with the MoD. This was attributed to deficient project management by the company, but also in part to the deficiencies in the terms of "fixed price contracts". CEO Michael Turner (businessman), Mike Turner said in 2006 "We had entered into contracts under the old competition rules that frankly we shouldn't have taken". These competition rules were introduced by Peter Levene, Baron Levene of Portsoken, Lord Levene during the 1980s to shift the burden of risk to the contractor and were in contrast to "cost plus contracts" where a contractor was paid for the value of its product plus an agreed profit.
BAE Systems was operating in "the only truly open defence market", which meant it was competing with US and European companies for British defence projects, while they were protected in their home markets. The US defence market is competitive, however largely between American firms, while foreign companies are excluded. In December 2005 the MoD published the Defence Industrial Strategy (DIS) which has been widely acknowledged to recognise BAE Systems as the UK's "national champion".
The government claimed the DIS would "promote a sustainable industrial base, that retains in the UK those industrial capabilities needed to ensure national security."
After the publication of the DIS BAE Systems CEO Mike Turner said "If we didn't have the DIS and our profitability and the terms of trade had stayed as they were... then there had to be a question mark about our future in the UK". Lord Levene said in the balance between value for money or maintaining a viable industrial base the DIS "tries as well as it can to steer a middle course and to achieve as much as it can in both directions. ...We will never have a perfect solution."
United States
The attraction of MES to British Aerospace was largely its ownership of Tracor, a major American defence contractor.
BAE Systems Inc. now sells more to the US Department of Defense (DOD) than to the UK MoD. The company has been allowed to buy important defence contractors in the US, however its status as a UK company requires that its US subsidiaries are governed by American executives under Special Security Arrangements. The company faces fewer impediments in this sense than its European counterparts, as there is a high Special Relationship (US-UK), degree of integration between the US and UK defence establishments. BAE Systems' purchase of Lockheed Martin Aerospace Electronic Systems in November 2000 was described by John Hamre, CEO of the Center for Strategic and International Studies and former United States Deputy Secretary of Defense, Deputy Secretary of Defense, as "precedent setting" given the advanced and classified nature of many of that company's products.
The possibility of a merger between BAE Systems Inc. and major North American defence contractors has long been reported, including Boeing, General Dynamics, Lockheed Martin, and Raytheon.
Rest of the world
BAE Systems Australia is one of the largest defence contractors in Australia, having more than doubled in size with the acquisition of Tenix Defence in 2008. The Al-Yamamah arms deal, Al Yamamah agreements between the UK and Saudi Arabia require "the provision of a complete defence package for the Kingdom of Saudi Arabia"; BAE Systems employs 5,300 people in the kingdom. As of March 2022, BAE Systems employs over 7,000 people in the Saudi Arabia, Kingdom of Saudi Arabia and 75 percent of the employees are Saudi nationals.
BAE Systems' interests in Sweden are a result of the purchases of Alvis plc, Alvis Vickers and UDI, which owned Hägglunds and Bofors respectively; the companies are now part of BAE Systems AB.
On 6 April 2022, BAE Systems announced the establishment of a subsidiary in Japan, called BAE Systems Japan, located in Akasaka, Tokyo. The new company will provide comprehensive cooperation with Japanese industry and aims to strengthen relations with the Ministry of Defense (Japan), Japanese Ministry of Defence and the Japan Self-Defense Forces, Self-Defence Force.
Shareholders
As of 21 February 2018 BAE Systems listed the following as "significant" shareholders: Axa and its group of companies 5.00%, Barclays 3.98%, BlackRock 5.00%, Capital Group Companies 10.11%, Franklin Templeton Investments and affiliates 4.92%, Invesco 4.97% and Silchester International Investors 3.01%.
Organisation
![FarnboroughAerospaceCentre panorama](https://upload.wikimedia.org/wikipedia/commons/6/68/FarnboroughAerospaceCentre_panorama.jpg)
BAE Systems has its head office and its registered office in City of Westminster, London. In addition to its central London offices, it has an office in Farnborough, Hampshire, that houses functional specialists and support functions.
Corporate governance
BAE Systems' chairman is Sir Roger Carr (businessman), Roger Carr. The executive directors are Charles Woodburn (CEO), Brad Greve and Tom Arsenault. The non-executive directors are Chris Grigg, Ewan Kirk, Ian Tyler, Nicole Piasecki, Stephen Pearce, Jane Griffiths, Nick Anderson, Carolyn Fairbairn, Crystal E. Ashby, and Elizabeth Corley.
The company's first CEO, John Weston, was forced to resign in 2002 in a boardroom "coup" and was replaced by Mike Turner.
''The Business'' reported that Weston was ousted when non-executive directors informed the chairman that they had lost confidence in him. Further, it was suggested that at least one non-executive director was encouraged to make such a move by the MoD due to the increasingly fractious relationship between BAE Systems and the government.
As well as the terms of the Nimrod contract, Weston had fought against the MOD's insistence that one of the first three Type 45 destroyers should be built by VT Group. ''The Business'' said he considered this "competition-policy gone mad".
It is understood that Turner had a poor working relationship with senior MoD officials, for example with former Defence Secretary Geoff Hoon. The first meeting between Olver and Hoon was said to have gone well; a MoD official commented "He is a man we can do business with". It has been suggested that relations between Turner and Olver were tense. On 16 October 2007 the company announced that Mike Turner would retire in August 2008. ''The Times'' called his departure plans "abrupt" and a "shock", given previous statements that he wished to retire in 2013 at the age of 65. Despite suggestions that BAE Systems would prefer an American CEO due to the increasing importance of the United States defence market to the company and the opportunity to make a clean break from corruption allegations and investigations related to the Al-Yamamah contracts, the company announced on 27 June 2008 that it had selected the company's chief operating officer, Ian King (businessman), Ian King, to succeed Turner with effect from 1 September 2008. The ''Financial Times'' noted that King's career at Marconi distances him from the British Aerospace-led Al Yamamah project.
Charles Woodburn succeeded Ian King as CEO on 1 July 2017. Woodburn joined BAE Systems in May 2016 as Chief Operating Officer and Executive Board Director following over 20 years' international experience in senior management positions in the oil and gas industry.
Senior leadership
* ''Chairman:'' Roger Carr (businessman), Sir Roger Carr (since 2014)
* ''Chief Executive:'' Charles Woodburn (since 2017)
List of former chairmen
# Richard Evans (businessman), Sir Richard Evans (1999–2004)
# Dick Olver, Sir Dick Olver (2004–2014)
List of former chief executives
#
John Weston (1999–2002)
# Michael Turner (businessman), Michael Turner (2002–2008)
# Ian King (businessman), Ian King (2008–2017)
Financial information
Financial information for the company is as follows:
Corruption investigations
Serious Fraud Office
BAE Systems has been investigated by the Serious Fraud Office (United Kingdom), Serious Fraud Office (SFO) for the use of corruption to help sell arms to Chile, Czech Republic, Romania, Saudi Arabia, South Africa, Tanzania and Qatar. In response, BAE Systems' 2006 Corporate Responsibility Report states "We continue to reject these allegations... We take our obligations under the law extremely seriously and will continue to comply with all legal requirements around the world. In June 2007 Lord Woolf was selected to lead what the BBC described as an "independent review.... [an] ethics committee to look into how the defence giant conducts its arms deals". The report, ''Ethical business conduct in BAE Systems plc – the way forward'', made 23 recommendations, measures which the company committed to implement. The finding stated that "in the past BAE did not pay sufficient attention to ethical standards in the way it conducted business", and was described by the BBC as "an embarrassing admission".
In September 2009, the SFO announced that it intended to prosecute BAE Systems for offences relating to overseas corruption. ''The Guardian'' claimed that a penalty more than £500 million might be an acceptable settlement package. On 5 February 2010, BAE Systems agreed to pay criminal fines of £257 million (US$400 million) to the US and £30 million to the UK. The $400 million fine was a result of a plea bargain with the US Department of Justice (DOJ) whereby BAE Systems was convicted of felony conspiracy to defraud the United States government. This was one of the largest fines in the history of the DOJ. Judge Bates said the company's conduct involved "deception, duplicity and knowing violations of law, I think it's fair to say, on an enormous scale". BAE Systems did not directly admit to bribery, and is thus not internationally blacklisted from future contracts. Some of the £30 million penalty the company will pay in fines to the UK will be paid ex gratia for the benefit of the people of Tanzania. On 2 March 2010, Campaign Against Arms Trade (CAAT) and The Corner House (organisation), Corner House Research were successful in gaining a High Court injunction on the SFO's settlement with BAE Systems; however in April 2010 the two organisations withdrew their application for a Judicial review in English law, judicial review.
Saudi Arabia
Both BAE Systems and its predecessor (BAe) have long been the subject of allegations of bribery in relation to its business in Saudi Arabia. The UK National Audit Office (United Kingdom), National Audit Office (NAO) investigated the Al Yamamah contracts and has so far not published its conclusions, the only NAO report ever to be withheld. The MoD has stated "The report remains sensitive. Disclosure would harm both international relations and the UK's commercial interests." The company has been accused of maintaining a £60 million Saudi slush fund. In November 2006, Saudi Arabia put pressure on the British government to end the SFO investigation by suspending negotiations over a new deal for seventy-two Typhoon fighter jets. On 14 December 2006 it was announced that the SFO was "discontinuing" its investigation into the company. It stated that representations to its Director and the Attorney General for England and Wales, Attorney General Peter Goldsmith, Baron Goldsmith, Lord Goldsmith had led to the conclusion that the wider public interest "to safeguard national and international security" outweighed any potential benefits of further investigation. The termination of the investigation has been controversial. In June 2007, the BBC's Panorama (TV series), Panorama alleged BAE Systems "paid hundreds of millions of pounds to the ex-Saudi ambassador to the US, Prince Bandar bin Sultan" in return for his role in the Al Yamamah deals. In late June 2007 the DOJ began a formal investigation into BAE's compliance with anti-corruption laws. On 19 May 2008 BAE Systems confirmed that its CEO Mike Turner and non-executive director Nigel Rudd had been detained "for about 20 minutes" at two US airports the previous week and that the DOJ had issued "a number of additional subpoenas in the US to employees of BAE Systems plc and BAE Systems Inc as part of its ongoing investigation". ''The Times'' suggested that such "humiliating behaviour by the DOJ" is unusual toward a company that is co-operating fully.
A judicial review of the decision by the SFO to drop the investigation was granted on 9 November 2007. On 10 April 2008 the High Court ruled that the SFO "acted unlawfully" by dropping its investigation. ''The Times'' described the ruling as "one of the most strongly worded judicial attacks on government action" which condemned how "ministers 'buckled' to 'blatant threats' that Saudi cooperation in the fight against terror would end unless the ...investigation was dropped." On 24 April the SFO was granted leave to appeal to the House of Lords against the ruling. There was a two-day hearing before the Lords on 7 and 8 July 2008. On 30 July the House of Lords unanimously overturned the High Court ruling, stating that the decision to discontinue the investigation was lawful.
Others
In September 2005 ''The Guardian'' reported that banking records showed that BAE Systems paid £1 million to Augusto Pinochet, the former Chilean dictator. ''The Guardian'' has also reported that "clandestine arms deals" have been under investigation in Chile and the UK since 2003 and that British Aerospace and BAE Systems made a number of payments to Pinochet advisers.
BAE Systems is alleged to have paid "secret offshore commissions" of over £7 million to secure the sale of HMS London (F95), HMS ''London'' and HMS Coventry (F98), HMS ''Coventry'' to the Romanian Navy. The company received a £116 million contract for the refurbishment of the ships prior to delivery; however the British taxpayer only received the scrap value of £100,000 each from the sale.
BAE Systems ran into controversy in 2002 over the abnormally high cost of a radar system sold to Tanzania. The sale was criticised by several opposition MPs and the World Bank; Secretary of State for International Development Clare Short declared that BAE Systems had "ripped off" developing nations.
In January 2007, details of an investigation by the SFO into BAE Systems' sales tactics in regard to South Africa were reported, highlighting the £2.3 billion deal to supply Hawk trainers and Gripen fighters as suspect. In May 2011, as allegations of bribery behind South Africa's Gripen procurement continued, the company's partner Saab AB issued strong denials of any illicit payments being made; however in June 2011 Saab announced that BAE Systems had made unaccounted payments of roughly $3.5 million to a consultant; this revelation prompted South African opposition parties to call for a renewed inquiry. The Gripen's procurement by the Czech Republic was also under investigation by the SFO in 2006 over allegations of bribery.
Criticism
Espionage
In September 2003 ''The Sunday Times'' reported that BAE Systems had hired a private security contractor to collate information about individuals working at CAAT and their activities. In February 2007, it was reported that the corporation had again obtained private confidential information from CAAT.
The company was reported in 2012 to have been the target of Chinese cyber espionage that may have stolen secrets related to the F-35 Lightning II.
Cluster bombs
In 2003, BAE Systems was criticised for its role in the production of cluster bombs, due to the long term risk for injury or death to civilians. Following the 2008 Oslo Convention on Cluster Munitions BAE Systems was among the first defence contractors to stop their manufacture and by 2012 the majority of the munitions had been destroyed.
Saudi war in Yemen
Saudi Arabia is BAE's third biggest market. ''The Independent'' reported that BAE-supplied aircraft were used to bomb Red Cross and MSF hospitals in Yemen." Sir Roger Carr rejected criticism over BAE's continued work in Saudi Arabia, saying "We will stop doing it when they tell us to stop doing it... We maintain peace by having the ability to make war and that has stood the test of time." BAE Systems sold weaponry worth £17.6 billion to Saudi Arabia during the Yemen war.
Political influence and donations
Former Foreign Secretary Robin Cook said of his time in office that he "came to learn that the chairman of BAE appeared to have the key to the garden door to 10 Downing Street, number 10. Certainly I never knew No 10 to come up with any decision which would be incommoding to BAE."
In the United States BAE Systems is a significant political donor to both Democratic and Republican candidates and organisations. In 2016 its political action committee (PAC) contributions were the second largest of any foreign corporation after UBS. In January 2021 following the 2021 United States Capitol attack BAE Systems announced that it was suspending political donations in the US. On 30 March it once again began making large political contributions, including one to the National Republican Senatorial Committee.
See also
* Aerospace industry in the United Kingdom
References
Further reading
* Hartley, Keith. ''The Political Economy of Aerospace Industries: A Key Driver of Growth and International Competitiveness?'' (Edward Elgar, 2014); 288 pages; the industry in Britain, continental Europe, and the US with a case study of BAE Systems.
External links
*
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