BAE Systems stock shot up yesterday, even by its own dizzying recent standards, and put on another 5% in the opening hours of trading today following confirmation of the UK-Saudi government-to-government deal that includes the purchase of 24 Eurofighter Typhoons.
On this occasion the market's reaction is fully justified - the deal is of huge importance to Britain's aerospace giant and is the product of agonising negotiations to sustain the Al Yamamah business relationship that has so far been worth a reported ｣43 billion.
It's true of course that 24 aircraft is not a huge quantity - but outside the USA it's about as many current generation fighters as anyone can hope to shift in an international sale in one go. It also helps keep BAE in the platform business for a while to come and beefs up its financial strength at a time when big-ticket partnerships are likely to be in its future.
But in the world of commercial aerospace things are not so rosy. BAE's activity in the field is essentially its 20% share in Airbus. And with the air transport sector growing like crazy - Airbus deliveries will be 370 in 2005 against 320 last year - life should be sweet indeed.
Not so unfortunately. BAE has been unable to shrug off its regional aircraft legacy and this year's Chapter 11 filings in the US, where bankruptcy judges have been particularly happy to see the aircraft lessors take the hit, have been a ghastly experience for it. Indeed it has just had to announce that the growth in its share of Airbus profits has been wiped out by the latest liabilities.
The talk for years has been around whether BAE should liquidate its Airbus holding, probably as part of its strategic thrust into the US. But I have the nasty feeling that this company may have to take one last hit to fix this chronic problem before it makes its 'big move'.