BAE to axe 371 jobs in Typhoon production slowdown

Up to 371 jobs are being axed at defence giant BAE Systems as the group said it was slowing production of its Typhoon jet fighters.

BAE is to axe up to 371 jobs as it slows production of its Typhoon fighter jets. Picture: Peter Byrne/PA Wire

BAE said the vast majority of the job losses would affect its 13,000-strong workforce in Samlesbury, Lancashire, although some roles will also be impacted in its Typhoon final assembly production team.

The group also warned that the move to slow jet production would hit its 2015 financial results and will see Typhoon production sales drop from about £1.3 billion in 2015 to about £1.1bn in 2016.

BAE said it hopes to look at opportunities elsewhere in the business to mitigate compulsory redundancies.

The group secured a deal to supply 28 Typhoon aircraft for the Kuwait Air Force in September, with deliveries from the Italian Typhoon final assembly line set to start around the end of the decade.

It is also in talks with Saudi Arabia to try to secure further Typhoon purchases, but discussions are making slow progress.

BAE chief executive Ian King said: “Overall the company is operating in an improving business environment and we continue to win new orders, with good prospects for the future.

“In the short term, action to extend the production life of Typhoon aircraft by reducing the current production rate and a charge to impair the carrying value of the Williamstown shipyard in Australia will impact the group’s 2015 results.”

BAE slashed its earnings outlook for the full year, saying it now expected earnings per share to be around 38p – the same as last year – having previously said they would be “marginally higher”.

While incoming orders have disappointed, the group said it expected talks to see additional Typhoon contract wins “in the months ahead” and forecasts good sales growth in 2015.

It added that “defence and security remain the first priority of governments in all of our markets”.

“In the UK, budget commitments to defence spending provide greater certainty and stability ahead of the forthcoming 2015 Strategic Defence and Security Review,” it said.

The firm also confirmed it had decided not to sell off its US-based information technology business, having put it under review in April after receiving external interest.

BAE, which employs more than 80,000 people worldwide, reported a £1.5bn drop in sales to £16.6bn for 2014 in February and said underlying earnings fell by 11 per cent to £1.7bn.

But it said at the time that it hoped earnings would improve in 2015 amid “greater stability and improving clarity” in its key markets.

In May, it announced it would retain both of its shipyards on the Clyde and make its most significant investment in them for decades.

In its long-awaited decision on the future of the shipyards, it said it would invest £100 million in improving and expanding manufacturing facilities at the Govan and Scotstoun yards.