Manufacturer anticipates UK MoD decision on Eurofighter Tranche 2 by year-end

BAE Systems' senior executive team has issued a sound set of financial results for the first half of this year and predicts continued improvement in the company's prospects.

Company sources also say the UK Ministry of Defence is close to concluding approval for Tranche 2 production of the Eurofighter Typhoon. The project is vital for BAE's Programmes business group, which has been hit by over-runs to the Typhoon, Nimrod MRA4 and Astute submarine projects.

BAE's head of Typhoon business Steve Mogford says much progress has been made on Tranche 2 negotiations, and "it is still feasible to get a conclusion by year-end". Eurofighter warned earlier this year that the four-nation project was in danger of a costly gap in production, but Mogford says Tranche 1 will now be realigned to maintain a "drumbeat" in production. Some planned Tranche 2 capabilities, such as air-to-surface weapons and a targeting pod, will be introduced towards the end of Tranche 1 production, he says, meeting a key demand of the UK MoD (Flight International, 10-16 August).

But BAE chief executive Mike Turner says the Tranche 2 deal will be finalised only when the terms are "suitable for our shareholders, the company and the MoD".

BAE recorded pre-tax profits of £486 million ($860 million) on first-half sales of £6.1 billion, up from respective totals of £465 million and £5.7 billion last year. A strong performance was logged in the Commercial Aerospace sector through BAE's 20% stake in Airbus, and its North America business unit met a 10% organic growth target.

BAE expects to complete its 2005 strategic plan in November - its first under the chairmanship of former BP deputy chief executive Dick Olver. A key strategy will be to continue BAE's current growth in the USA through further acquisitions.



Source: Flight International