A slowdown in orders for Typhoon jets has hit sales at BAE Systems – though bosses have boasted of growing interest for its next-generation fighter.
Saudi Arabia has yet to firm up plans to buy 48 of the jets while a contract with Qatar for 28 is not due to start bringing in cash until later this year.
The drop in orders has already forced BAE to chop around 2,000 jobs and cut production, hitting its plants in Warton and Samlesbury, Lancashire.
Next generation: BAE has been spurred by interest in its new Tempest fighter jet designed to eventually replace the Typhoon
But boss Charles Woodburn said discussions with Saudi, which has signed a memorandum of intent, were progressing and there could be more orders from Europe.
He said: ‘We have had constructive and positive conversations with the Saudi customer and those continue. I am not going to put a time-frame around the discussions.
They are a very important customer for us. We do an awful lot in the kingdom already and we see strong potential for years to come.
‘There are now increasing opportunities into Europe. For Germany to take additional Typhoons to replace their Tornadoes – and additional sales into Europe – would drive growth back into that platform well over the next decade.’
BAE the numbers
£130m – Sale price of BAE System’s Typhoon jet
100,000 – BAE jobs supported by production of Typhoon
623 – Typhoon jets made so far, for seven countries
Overall, BAE’s sales slid from £9.4billion to £8.8billion during the first half of the year while profits slid from £976million to £874million.
However, the firm has been spurred by interest in its new Tempest fighter jet (pictured) designed to eventually replace the Typhoon, with the Government pledging £2billion to develop the aircraft.
BAE and its partners are committing ‘substantial’ funding but are not saying how much. They are looking for further partners and Sweden has been suggested as possibly interested.
Woodburn said there had been strong interest from potential collaborators since Farnborough, with a decision expected in the middle of next year.
He said: ‘We remain open-minded. We will just see over the next few months who is keen and what they bring to the table with respect to capabilities and partnerships.’
BAE employs 83,900 people in 40 countries making weapons, tanks, submarines, fighter jets and technology to beat cyber-attacks.
Programmes include the F-35 US-UK fighter jet and the UK’s Dreadnought submarine.
BAE is taking a £15million charge on problems with a new patrol vehicle it is delivering for the Royal Navy.
The first of the five offshore vessels completed sea trials in December 2017, with mistakes now being fixed.
Reported defects included bolt fastenings and the electrical system on HMS Forth.
BAE this year also faced problems at its Radford ammunition plant in the US. A worker died there following a flash fire in June and BAE is now in dispute with a contractor.
It has restructured its anti-cyber attack cyber intelligence unit – and says it is on track to break even this year after losses in the first half of last year.
Woodburn said: ‘What we offer is a strong capability to government customers and that continues to grow.
‘In the commercial space we offer a defence-grade capability and the challenge has been in the commercial space – are customers prepared to pay a premium for a premium product?
‘To date we have not necessarily seen that although one hopes going into the future people are prepared to pay for a differentiated service.’