BAE anticipates challenging times

A substantial programme of cost reduction and efficiency improvements was already well underway to address such issues. BAE said that its cost reduction programme, including a net headcount reduction of 3,300 during the first half year, would be of sustained benefit to performance, enhance competitiveness and deliver further improved value for customers. However, the company said that despite a planned lower level of land vehicle activity, it continued to expect growth for 2010. Following a review of markets and customers' needs in the US, changes to BAE Systems' organisation were being implemented to realign its US arm to better deliver its strategy. Reductions in costs would flow from a simplified organisation that will result in the business in the US being more competitive in a challenging environment, the company said. The US Quadrennial Defense Review had restated the US's commitment to the large, next generation, F-35 Lightning II (pictured) combat aircraft programme in which BAE Systems is a significant participant. In the six months ended 30 June, BAE Systems' sales hit £10.6bn (six months ended 30 June 2009: £9.7bn) producing an operating profit of £866m (£507m).