BAE Systems to axe up to 3,000 UK jobs

Transportation Reuters

LONDON (Reuters) - Europe's biggest defense contractor BAE Systems <BAES.L> said it will axe up to 3,000 jobs in Britain as cuts to global defense budgets hit orders for its fighter jets.

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The company, which is Britain's biggest manufacturer, said the four partner nations in the Eurofighter Typhoon program were slowing production rates to help ease their budget pressures, affecting the workload at a number of sites.

BAE Systems has a 33 percent stake in the Eurofighter joint venture company alongside EADS <EAD.PA> and Finmeccanica <SIFI.MI> and had received orders for 550 planes from the four partner nations involved -- the UK, Germany, Italy and Spain.

The company is continuing to pursue Typhoon sales in India, Japan, Oman and Malaysia and has said exporting the fighter aircraft remains a priority.

British and U.S. arms suppliers have been battling to win new business in emerging defense markets as they look to offset belt-tightening at home.

The majority of the job losses will come at two of BAE System's plants in northern England -- one in Warton, Lancashire and the other in Brough, East Yorkshire.

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BAE Systems, which has already axed around 15,000 employees worldwide over the last two years, reported a decline in first half pretax profit in July.

Weapons makers globally are bracing for more cuts in defense spending sparked partly by this summer's debt-ceiling deal in the United States -- the world's biggest arms market.

"Pressure on the US defense budget and top level program changes mean the anticipated increase in F-35 production rates will be slower than originally planned, again impacting on our expected workload," said BAE in a statement on Tuesday.

The U.S. defense department is cutting at least $350 billion from previously projected spending, and additional cuts could kick in if Congress fails to find more deficit reductions by year-end.

Britain last year slashed its defense budget by 8 percent to help reduce its deficit -- cutting its army, navy and air force -- hitting arms makers such as BAE, which makes around a fifth of its revenue in the UK.

(Reporting by Matt Scuffham and Rosalba O'Brien, Editing by Chris Wickham)

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