US shutdown sees BAE workers told to stay at home

AROUND 1,200 BAE Systems staff have been told not to report to work in the US as the government shutdown continues.

Unlike their US colleagues, staff at BAE sites in Glasgow can still clock in to work. Picture: Getty

Although the UK defence contractor said the issue affecting its intelligence, security and support staff embedded within government operations had not yet had a material impact, it warned it could be hit if the stalemate is not resolved.

BAE said the staff were told not to report for work from 1 October and although the company has paid their wages up until last Friday, a spokeswoman said it “cannot continue that with no end date in sight”. The staff involved have not been redeployed.

BAE has around 30,000 US staff who work on programmes ranging from cyber security to armoured vehicles.

Wrangling over raising America’s debt ceiling has caused the ten-day closure of parts of the US administration, freezing work in the many government departments including defence.

BAE also said while it hopes to conclude talks over a crucial fighter jet order with Saudi authorities before the end of the year, earnings and plans for a £1 billion share buyback scheme would be hit if the talks extend into next year.

It estimated earnings could be reduced by 6-7p per share should it fail to reach agreement on the jet deal.

The group said it was still assuming the deal would be completed, enabling it to maintain its outlook.

It anticipates double-digit growth in underlying earnings per share for 2013 on expectations that it agrees pricing with Saudi Arabia over the purchase of 72 Eurofighter Typhoon jets.

The company, which otherwise said it was trading in line with its expectations, has been locked in the pricing negotiations with Saudi Arabia over the purchase of the Eurofighter Typhoon jets and said in August that it expected the long-awaited deal to complete in the second half of this year.

The so-called Salam deal was signed in 2007 and is said to be worth about £4.5bn.

BAE builds the Eurofighter alongside European aerospace group EADS and Italian defence contractor Finmeccanica.

It also said discussions with the Ministry of Defence about the future of its major shipyards in the UK, which include Govan and Scotstoun, were continuing.

In international markets, where it has stepped up its efforts to counter reduced spending in the US and Europe, BAE said it had achieved £5bn of non-US and UK orders in the year to date, and it was continuing to pursue multiple opportunities, including prospects in the United Arab Emirates It had so far purchased 34 million shares for £134 million under a £1bn share buyback programme that it launched in February, whose full implementation is subject to the conclusion of the Salam deal.

In August, BAE Systems was awarded an eight year, £331m contract to maintain the readiness of Minuteman III intercontinental ballistic missiles in the US.

The group will provide systems engineering, integration, testing, logistics and other services to support the missile, ground and launch systems for 450 deployed missiles.

Shares in BAE closed up 10.7p, or 2.4 per cent, at 450.7p.