{{Infobox Company 
| company_name = BAE Systems plc
| company_logo = [[Image:BAE_SYSTEMS.png|180px| ]]
| company_type = Public ({{lse|BA.}}, {{otcbb|BAESY}})
| foundation = [[30 November]] [[1999]]
| location = [[Farnborough, Hampshire|Farnborough]], [[UK]]
| key_people = [[Dick Olver]], Chairman<br>[[Michael Turner (businessman)|Mike Turner]], CEO
| industry = [[Aerospace]] and [[Arms industry|defence]]
| products = Civil and military aerospace<br>Defence electronics<br>[[Naval ship|Naval vessels]]<br>[[Munition]]s<br>[[Armoured fighting vehicle|Land warfare systems]]
| revenue = {{profit}} [[Pound sterling|GB£]]15,411&nbsp;million (2005)<ref name="findata">{{cite web|url=http://ir.baesystems.com/bae/fin_info/reports/annrep2005/annrep2005.pdf |title=BAE Systems 2005 Annual Report |accessdate=2006-03-13 |format=PDF |work= |publisher=BAE Systems |pages=36}}</ref>
| operating_income = GB£1,182&nbsp;million <ref name="findata"/>
| net_income = GB£583&nbsp;million <ref name="findata"/>
| num_employees = 100,100 (2005) <ref name="findata"/>
| subsid = [[BAE Systems Inc.]]
| homepage = [http://www.baesystems.com www.baesystems.com]
| footnotes =
}}
'''BAE Systems plc''' is the world's fourth largest [[defence contractor]],<ref name="top100">{{cite web|url=http://www.defensenews.com/content/features/2005chart1.html |title=Defense News Top 100 |accessdate=2006-05-30 |publisher=www.DefenseNews.com}}</ref> the largest in [[Europe]] and a commercial aerospace manufacturer. BAE is a [[United Kingdom|British]] company based at [[Farnborough, Hampshire|Farnborough]], which has extensive worldwide interests, particularly in North America through its subsidiary [[BAE Systems Inc]]. BAE was formed on [[30 November]] [[1999]] with the [[merger]] of [[British Aerospace]] (BAe) and [[Marconi Electronic Systems]] (MES), the defence arm of [[The General Electric Company]] (GEC). 

BAE is the successor to many iconic aircraft and defence electronics companies, including [[Marconi Company|The Marconi Company]], the first commercial company devoted to the development and use of radio; [[Avro|A.V. Roe and Company]], one of the world's first aircraft companies; [[de Havilland|de Havilland]], manufacturer of the world's [[de Havilland Comet|first]] commercial [[Jet engine|jet]] [[airliner]]; [[British Aircraft Corporation|BAC]], co-manufacturer of the [[Concorde]] [[supersonic transport]]; and [[Supermarine]], the manufacturer of the renowned [[Supermarine Spitfire|Spitfire]]. BAE has increasingly disengaged from its businesses in continental Europe in favour of investing in the United States. Since its formation it has sold its share of or dissolved the companies [[Astrium]], [[Alenia Marconi Systems|AMS]], [[Atlas Elektronik]] and its 20% share of [[Airbus|Airbus SAS]].

BAE Systems is involved in several major defence projects, including the [[F-35 Lightning II]], the [[Eurofighter Typhoon]] and the Royal Navy [[Royal Navy CVF programme|future carriers]]. BAE has been the subject of criticism, both general opposition to the arms trade and also specific allegations of unethical and corrupt practices, including the [[Al Yamamah]] contracts with [[Saudi Arabia]] that have earned BAE and its predecessor GB£43&nbsp;billion in twenty years.<ref>{{cite news | last =O’Connell| first =Dominic | title =BAE cashes in on £40bn Arab jet deal | work=The Sunday Times| publisher = News International | date = 2006-08-20 | url = http://www.timesonline.co.uk/article/0,,2095-2320097,00.html | accessdate =2006-08-22  }}</ref>

==History==
The merger of British Aerospace and Marconi Electronic Systems was announced on [[19 January]] [[1999]].<ref>{{cite web| url = http://ir.baesystems.com/bae/fin_info/reports/ar99/ar99.pdf| title = BAE Systems Annual Report 1999| accessdate = 2006-10-27| date =2000 | format = PDF| publisher = BAE Systems plc| pages = 22}}</ref> MES was acquired by British Aerospace for [[Pound sterling|GB£]]7.7&nbsp;billion.<ref>{{cite news | title = BAe drops "British" from its name and eyes global dominance |work=Financial pages | publisher = Agence France Presse | date = 1999-11-30 | accessdate = 2006-12-07}}</ref>

===Heritage===
[[Image:BAE Systems evolution.png|thumb|250px|Evolution of UK aviation, 1955 to BAE Systems formation in 1999 (includes naval acquisitions)]]
[[Image:BAE Systems Land evolution.png|thumb|250px|Evolution of the land systems division of BAE Systems, 1970s to [[BAE Systems Land and Armaments|Land & Armaments]] formation]]
[[Image:British Shipbuilders evolution.png|thumb|250px|The evolution of the British shipbuilding industry, including [[BAE Systems Naval Ships]] and [[BAE Systems Submarines]]]]
As a result of the British Aerospace-MES merger, BAE Systems is the successor to many of the most famous British aircraft, defence electronics and warship manufacturers.

Marconi Electronic Systems had a heritage of almost 100 years. Following GEC's acquisition of Marconi in 1968 the Marconi brand was used for its defence businesses, for example Marconi Space & Defence Systems (MSDS). GEC's history of military products dates back to [[World War I]] with its contribution to the war effort then including radios and bulbs. [[World War II]] consolidated this position, as the company was involved in important technological advances, most notably [[radar]].<ref>{{cite web | url = http://www.marconi.com/Home/about_us/Our%20History/GEC%20Heritage/Everything%20Electrical/everythingpages1to6.pdf| title = Everything Electric: A Brief History of GEC| accessdate = 2006-10-27| date = 1999| format = PDF| publisher = The General Electric Company plc| pages = 3}}</ref> Between 1945 and the British Aerospace merger in 1999, the company became one of the world's most important [[defence contractor]]s. GEC's major defence related acquisitions included [[Associated Electrical Industries]] in 1967, [[English Electric]] (including its [[Marconi Company|Marconi]] subsidiary) in 1968, [[Yarrow Shipbuilders Limited]] in 1985, [[Plessey]] companies in 1989, parts of [[Ferranti]]'s defence business in 1990, [[Vickers Shipbuilding and Engineering]] in 1995 and [[Govan#Govan shipyard|Kværner Govan]] in 1999. In June 1998, MES acquired [[Tracor]], a major American defence contractor, for [[United States dollar|US$]]1.4 billion.<ref>{{cite news | title = GEC Completes Tracor Acquisition | url = http://calbears.findarticles.com/p/articles/mi_m0EKF/is_2228_44/ai_50176005 | work = Electronic News | publisher = Reed Business Information | date = 1998-07-20 | accessdate = 2006-10-27}}</ref>

British Aerospace was the result of massive consolidation of UK aircraft manufacturers since World War II. British Aerospace was formed on [[29 April]] [[1977]] by the nationalisation and merger of The [[British Aircraft Corporation]], the [[Hawker Siddeley|Hawker Siddeley Group]] and [[Scottish Aviation]].<ref>{{cite web| url = http://www.baesystems.com/aboutus/evolution.htm| title = About Us: Our Evolution | accessdate = 2006-10-27| date = 1999| work = www.baesystems.com| publisher = BAE Systems plc}}</ref> Both BAC and Hawker Siddeley were themselves the result of various mergers and acquisitions; BAC incorporated [[English Electric|English Electric Aviation Ltd]], [[Vickers-Armstrong|Vickers-Armstrong (Aircraft)]], the [[Bristol Aeroplane Company]] and [[Hunting Aircraft]], while Hawker Siddeley was formed by Hawker Aircraft's purchase of aviation businesses including [[Gloster Aircraft Company|Gloster Aircraft]], [[Armstrong Whitworth Aircraft]], [[Avro|A V Roe]] and later merger with [[de Havilland]] in 1959. The acquisition of [[Folland]] and [[Blackburn Aircraft]] followed, and in 1960 this group was consolidated as the Hawker Siddeley Group.

===Formation===
It was widely anticipated that British Aerospace would merge with Germany’s [[DASA]] to form a pan-European aerospace giant.<ref>{{cite news | url =http://news.bbc.co.uk/1/hi/business/the_company_file/257264.stm | title =GEC confirms BAe merger talks | work = | publisher =BBC News | pages = | page = | date =1998-01-18 | accessdate =2005-12-08 | language = }}</ref> A merger deal was negotiated between Richard Evans and DASA CEO [[Jürgen E. Schrempp|Jürgen Schrempp]].<ref>{{cite news | last =Spiegel | first =Peter | title =End of an era at BAE: how Sir Richard Evans changed the UK defence industry | publisher =Financial Times  | date =2004-07-17}}</ref> However when it became clear that GEC was selling its defence electronics business [[Marconi Electronic Systems]], Evans put the DASA merger on hold in favour of purchasing Marconi. Evans stated that in 2004 that his fear was that an American defence contractor would acquire Marconi and challenge both British Aeropspace and DASA. Schrempp was angered by Evans' actions and chose instead to merge DASA with Aerospatiale to create the European Aeronautic Defence and Space Company ([[EADS]]). This group was joined by Spain’s CASA following an agreement in December 1999.

Various undertakings were given by BAE Systems to the [[Department of Trade and Industry]] which prevented a reference of the merger to the [[Monopolies and Mergers Commission]]. These were largely to ensure that the integrated company would tender sub-contracts to external companies on an equal basis with its subsidiaries. Another condition was the "firewalling" of former BAe and MES teams on defence projects such as the [[F-35 Lightning II|Joint Strike Fighter]].<ref>{{cite web |url=http://www.baesystems.com/mergerundertakings/pdf/MergerUndertakings.pdf  |title=Undertakings given to the Secretary of State for Trade and Industry by British Aerospace plc |accessdate=2005-12-08 |publisher=BAE Systems}}</ref> In 2006 the [[Office of Fair Trading]] announced it had launched a review of the undertakings to determine whether they were still appropriate.<ref>{{cite press release | title =OFT to review BAE Systems undertakings | publisher =[[Office of Fair Trading]] | date =2006-02-09 | url =http://www.oft.gov.uk/News/Press+releases/2006/25-06.htm}}</ref>

The attraction of MES may well have been Tracor,<ref>{{cite news| first = Kerry | last = Capell | title = GEC: From Dowager to Sexy High-Tech Star? | url = http://www.businessweek.com/1999/99_05/b3614172.htm | work = www.businessweek.com | publisher = Business Week | date = 1999-02-01 | accessdate = 2006-10-27}}</ref> which was the largest European defence purchase in the United States at that point. The creation of a UK company, compared with what would have been a British–German firm, made the possibility of penetrating the US defence market more likely. Since its creation the company has steadily increased its investment in and revenues from the US. At the same time, continental European companies have made limited moves into that market. Major European companies such as [[Thales Group|Thales]] and EADS are unlikely to ever be awarded, for example, a position relative to BAE Systems' involvement in the [[F-35 Lightning II|F-35 Joint Strike Fighter]] programme.

BAE Systems inherited the "special" shareholding that was established when British Aerospace was privatised. This special share, with a nominal value of GB£1, is held on behalf of the [[Secretary of State for Trade and Industry]]. This shareholding prevents amendments of certain parts of the company's [[Articles of Association (law)|Articles of Association]] without the permission of the Secretary of State.<ref>{{cite web|url=http://www.competition-commission.org.uk/rep_pub/reports/1991/fulltext/296c2.pdf |title=BAe and Thompson-CSF SA: A report on the proposed merger |accessdate=2005-12-08 |date=1991-02-06 |publisher=[[Competition Commission]]}}</ref> These Articles require that no foreign person or persons acting together may hold more than 15% of the company's shares or control the majority of the board and that the CEO and the Chairman of BAE Systems must be British nationals.

===Expansion and restructuring===
With almost total consolidation of the defence industry on the European continent, BAE Systems turned its attention to North America, for example acquiring [[Lockheed Martin Control Systems]], (LMCS) which produces controls for the [[B-2 Spirit]] bomber, the [[C-17 Globemaster III]] strategic transport, the [[F/A-18 Hornet]], the [[Boeing 757]] and [[Boeing 767]] commercial jets. BAE has long been the subject of press reports linking it to major North American defence contractors, including [[Boeing]], [[Lockheed Martin]] and [[General Dynamics]]. The company's shipbuilding assets have been named as blocks to any merger with either Boeing or Lockheed Martin.<ref name="mergerships">{{cite news |url=http://news.bbc.co.uk/2/hi/business/3660139.stm| title =BAE shares rise after sales talk | publisher =BBC News | date =2004-04-26 | accessdate =2005-12-08}}</ref> The appeal of a link with a North American company is strong as the US defence market is by far the largest in the world. BAE Systems faces considerably fewer hurdles in this sense than their European counterparts, as there is a high [[special relationship|degree of integration]] between the US and UK defence establishments. 

In 2000 [[Matra Marconi Space]], a joint BAE/[[Matra]] company, was merged with the space division of [[DASA|DaimlerChrysler Aerospace AG]] to form [[Astrium]]. On [[16 June]] [[2003]] BAE sold its 25% share to EADS, making EADS the sole shareholder. In [[November 2001]], BAE announced the closure of the Avro Regional Jet ([[BAe 146|Avro RJ]]) production line at [[Woodford, Cheshire|Woodford]] and the cancellation of the Avro RJX, an advanced series of the aircraft family. The final Avro RJ to be completed became the last British civil airliner. BAE continues to support operators of its products through [[BAE Systems Regional Aircraft]]. In December 2001 BAE's missile businesses were merged into MBDA, in which it acquired a 37.5% stake. This included its share of [[Matra BAe Dynamics]] and the missile division of [[Alenia Marconi Systems]]. On [[16 March]] [[2006]] the ''[[Financial Times]]'' reported the possible sale of BAE's 37.5% share of [[MBDA]], with EADS said to be keen to take full control of the joint venture by acquiring the BAE share and [[Finmeccanica]]'s 25%.<ref>{{cite news | first = | last = | title ="MBDA prepares for consolidation" | work =Financial Times | publisher =The Financial Times Ltd. date =2006-03-16 |accessdate =2006-03-18}}</ref>

In [[June 2002]], BAE confirmed it was in takeover discussions with [[TRW]], an American aerospace, automotive and defence business. This was prompted by [[Northrop Grumman]]'s GB£4.1&nbsp;billion (approx. US$6&nbsp;billion c.2002)  hostile bid for TRW in February 2002. A bidding war between BAE, Northrop and General Dynamics ended on [[2002-06-01]] when Northrop's increased bid of GB£5.1&nbsp;billion was accepted. On [[12 December]] [[2002]], BAE issued a shock profit warning due to cost overruns of the [[Hawker-Siddeley Nimrod|Nimrod MR4]] maritime reconnaissance/attack aircraft and the [[Astute class submarine|Astute SSN]] projects. On [[2003-02-19]] BAE Systems took a charge of GB£750 million against these projects and the [[Ministry of Defence (United Kingdom)|Ministry of Defence]] (MOD) agreed to pay GB£700&nbsp;million of the cost overrun. In 2000 the company had taken a GB£300&nbsp;million "loss charge" on the Nimrod contract which was expected to cover "all the costs of completion of the current contract".<ref>{{cite news | first = Kevin | last = Done | title = Nimrod refit turns into nightmare | work = Financial Times | publisher = The Financial Times Ltd. | page = 24 | date = 2002-12-13 | accessdate = 2007-01-06}}</ref>

In [[May 2004]], it was reported that BAE Systems was considering selling its shipbuilding division, [[BAE Systems Marine]]. It was understood that General Dynamics wished to acquire the submarine building facilities at Barrow, while [[Vosper Thornycroft]] was said to be interested in the remaining yards on the [[River Clyde|Clyde]].<ref name="mergerships"/> [[As of 2007]] the more likely move for BAE Systems' shipbuilding operations is a merger with other British naval shipyards to form a "Newco" shipbuilding company, an aim which is central to the [[Her Majesty's Government|British Government's]] [[Defence Industrial Strategy]].<ref>{{cite news | title = BAE supports mergers despite Babcock failure | work = Lloyd's List | publisher = Lloyd's List International | date = 2006-09-14| accessdate = 2007-01-01}}</ref> On [[23 March]], [[2006]] BAE and [[VT Group]] announced that they were considering a joint bid for [[Babcock International Group|Babcock International]]. On [[10 May]], [[2006]], BAE Systems abandoned the plan because "the economics of a deal do not create sufficient value for BAE Systems or the other parties".<ref>{{cite news | first =Caroline | last =Muspratt | author = | coauthors =| url =http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2006/05/10/ubabc10.xml&sSheet=/money/2006/05/10/ixcitytop.html | title =BAE and VT pull out of Babcock bid | work = | publisher =www.telegraph.co.uk | date =2006-05-10 | accessdate =2006-05-14}}</ref>

[[Image:1BFV01.jpg|thumb|250px|BAE's GB£2.5&nbsp;billion purchase of United Defense in 2005 added the [[M2 Bradley|M2/M3 Bradley]] family of armoured vehicles to its product line.]]On [[4 June]] [[2004]], BAE Systems outbid General Dynamics for [[Alvis Vickers]], the UK's main manufacturer of munitions and armoured vehicles. On [[7 March]] [[2005]] BAE Systems announced the GB£2.25&nbsp;billion (approx. US$4.2&nbsp;billion c.2005) acquisition of the USA defence company [[United Defense|United Defense Industries]] (UDI). UDI, a major competitor to General Dynamics, was primarily a land systems manufacturer, boosting BAE Systems' involvement in this sector. UDI, now [[BAE Systems Land and Armaments]], manufactures combat vehicles, artillery systems, naval guns, missile launchers and precision guided munitions.

In [[December 2005]], BAE announced the sale of its German naval systems subsidiary, [[Atlas Elektronik]], to [[ThyssenKrupp]] and EADS. The sale was complicated by the requirement of the German government to approve any sale. The ''Financial Times'' described the sale as "cut price" due to the fact that French company Thales bid [[Euro|€]]300&nbsp;million, but was blocked from purchasing Atlas on national security grounds.<ref>{{cite news | title =BAE forced into cut-price sale | publisher =Financial Times | date = | accessdate =2006-01-03}}</ref> On [[31 January]] [[2006]] BAE announced the sale of BAE Systems Aerostructures to [[Spirit AeroSystems, Inc.]] BAE said as early as 2002 that it wished to dispose of what it did not regard as a "core business".<ref>{{cite news | url =http://news.bbc.co.uk/1/hi/scotland/2326285.stm | title =Fears for future of BAE plant | publisher =BBC News | date =2002-10-14 |accessdate =2006-01-31}}</ref>

===Eurosystems===
{{main|Eurosystems}}
In [[July 2003]] BAE Systems and Finmeccanica announced their intention to set up three joint venture companies, to be collectively known as [[Eurosystems]]. These companies would have pooled the avionics, [[C4ISR]] and communications businesses of the two companies. The difficulties of integrating the companies in this way lead to a re-evaluation of the proposal, BAE's 2004 Annual Report states that "recognising the complexity of the earlier proposed Eurosystems transaction with Finmeccanica we have moved to a simpler model." The main part of this deal was the dissoloution of [[Alenia Marconi Systems|AMS]].

===Airbus shareholding===
{{main|Airbus}}
BAE Systems inherited British Aerospace's share of [[Airbus Industrie]], which consisted of two factories at [[Broughton]] and [[Filton]]. These facilities manufactured wings for the Airbus family of aircraft. In 2001 Airbus was incorporated as [[Airbus|Airbus SAS]], a [[Société par actions simplifiée|joint stock company]]. In return for a 20% share in the new company BAE Systems transferred ownership of its Airbus plants (known as [[Airbus UK]]) to the new company.

BAE had long been the subject of press reports regarding the future of its 20% share of Airbus. ''[[The Economist]]'s "The World in 2006"'' said BAE was "almost certain to sell" its Airbus share to EADS in 2006 to fund a major U.S. acquisition and named [[L-3 Communications]] as an "obvious candidate". Despite denials by the company the BBC reported on [[6 April]] [[2006]] that it was indeed to sell its stake, then "conservatively valued" at GB£2.4&nbsp;billion.<ref name="BBC Airbus">{{cite news |url=http://news.bbc.co.uk/1/hi/business/4886154.stm | title =BAE confirms possible Airbus sale | publisher =BBC News | date =2006-04-07 | accessdate =2006-08-12}}</ref> 

Due to the slow pace of informal negotiations BAE exercised its [[put option]] which saw investment bank [[N M Rothschild & Sons|Rothschild]] appointed to give an independent valuation. Six days after this process began, Airbus annouced delays to the [[Airbus A380|A380]] which caused a 26% collapse in the EADS share price and hence in the value of Airbus SAS. On [[2 June]] [[2006]] Rothschild valued BAE's share at GB£1.87&nbsp;billion, well below BAE's, analysts' and even EADS' expectations.<ref>{{cite news | first =David | last =Gow | url =http://business.guardian.co.uk/story/0,,1811589,00.html | title =BAE under pressure to hold Airbus stake | work = | publisher =The Guardian |date =2006-07-03 | accessdate =2006-07-03}}</ref> The BAE board recommended that the company proceed with the sale. On [[4 October]] [[2006]] shareholders voted in favour and the sale was completed on [[13 October]].<ref>{{cite news | title = BAE Systems says completed sale of Airbus stake to EADS | publisher = Forbes.com | date =2006-10-13 | url = http://www.forbes.com/markets/feeds/afx/2006/10/13/afx3089453.html | accessdate =2006-10-13}}</ref>

===Recent events===
One of BAE's major aims, as highlighted in the 2005 Annual Report, was the granting of increased technology transfer between the UK and the US. The F-35 (JSF) programme became the focus of this effort, with British government ministers such as [[Paul Drayson, Baron Drayson|Lord Drayson]], [[Defence Procurement Agency|Minister for Defence Procurement]], suggesting the UK would withdraw from the project without the transfer of technology that would allow the UK to operate and maintain F-35s independently. However on [[12 December]] [[2006]], Lord Drayson signed an agreement which met the UK's demands for further participation. The agreement allows "an unbroken British chain of command" for operation of the aircraft. <ref>{{cite news | title = UPDATE 2 - UK signs memo with US on Joint Strike Fighter | url = http://today.reuters.com/news/articleinvesting.aspx?view=CN&storyID=2006-12-12T194026Z_01_L12783097_RTRIDST_0_BRITAIN-JSF-UPDATE-2.XML&rpc=66&type=qcna | work = | publisher = Reuters | date = 2006-12-12 | accessdate = 2006-12-13}}</ref>

On [[18 August]] [[2006]] Saudi Arabia signed a contract for 72 [[Eurofighter Typhoon]]s, to be delivered by BAE Systems. Reports suggests the contract is worth GB£6&nbsp;billion to GB£10&nbsp;billion to UK industry.<ref>{{cite news | url =http://news.bbc.co.uk/1/hi/business/5262120.stm | title = Saudi Arabia buys 72 Eurofighters | publisher =BBC News | date =2006-08-18 | accessdate =2006-08-18}}</ref> On [[10 September]] [[2006]] BAE was awarded a GB£2.5&nbsp;billion contract for the upgrade of 80 RSAF Tornado IDSs.<ref>{{cite news | last = Steiner | first = Rupert | title = BAE clinches new £2.5bn Tornado deal with Saudis | publisher = [[The Business]] | date =2006-09-10 | url = http://www.thebusinessonline.com/Stories.aspx?BAE%20clinches%20new%20%C2%A32.5bn%20Tornado%20deal%20with%20Saudis&StoryID=CCB0F5FD-9EAB-4177-ACEE-4288DA084899&SectionID=F3B76EF0-7991-4389-B72E-D07EB5AA1CEE | accessdate =2006-09-12}}</ref>

==Products==
[[Image:F-35.jpg|250px|thumb|right|BAE Systems is a partner in the F-35 Lightning II programme]]
BAE Systems' interests in commercial aviation are vested in [[BAE Systems Regional Aircraft]]. This unit no longer produces aircraft, however it continues to lease and support its products, the [[Avro RJ|Avro RJ/BAE 146]] family, [[BAe ATP]], [[Handley_Page_Jetstream|Jetstream]] and [[BAe 748]]. BAE plays important roles in military aircraft production. The company's [[Eurofighter Typhoon]], [[Panavia Tornado]] and [[RAF Harrier II|Harrier]] fighter-bombers are all front line aircraft of the Royal Air Force. BAE is a major partner in the [[F-35 Lightning II]] programme. Its [[BAE Hawk|Hawk]] advanced jet trainer aircraft has been widely exported.

[[BAE Systems Land Systems]] manufactures the British Army's [[Challenger 2 tank|Challenger II]], [[Warrior Tracked Armoured Vehicle]], [[M777 howitzer]], [[Panther Command and Liaison Vehicle]] and [[SA80|L85 Assault Rifle]]. [[BAE Systems Land and Armaments]] manufactures the [[M2 Bradley|M2/M3 Bradley]] fighting vehicle family, the United States Navy [[Advanced Gun System]] (AGS) and the [[M109 howitzer|M109 Paladin]].

Major naval projects include the [[Astute class submarine|''Astute'' class]] [[nuclear submarine]], the [[Type 45 destroyer|Type 45]] air defence destroyer and the [[Royal Navy CVF programme|future aircraft carrier]].

==Position in its markets==<!-- This section written after a suggestion from the last FAC. Any suggestions are very welcome, including suitability of the title. -->
BAE Systems is the predominant supplier to the UK Ministry of Defence, being the only company to receive more than GB£1&nbsp;billion from the MOD in 2004/2005.<ref>{{cite web| url = http://www.mod.uk/NR/rdonlyres/F530ED6C-F80C-4F24-8438-0B587CC4BF4D/0/def_industrial_strategy_wp_cm6697.pdf| title = Defence Industrial Strategy: Defence White Paper| accessdate = 2006-09-11| author =| date = December 2005| format = PDF| work = | publisher = Ministry of Defence| pages = 30}}</ref> Since its creation BAE Systems has had a difficult relationship with the MOD. This has been attributed to deficient project management by the company, but also in part to the deficiencies in the terms of "fixed price contracts". BAE CEO Mike Turner said in 2006 "We had entered into contracts under the old competition rules that frankly we shouldn’t have taken."<ref>{{cite news | first =Angela | last = Jameson | title = BAE Systems chief reaps reward for years of fighting for revival | url = http://www.timesonline.co.uk/article/0,,630-2059728,00.html | work = The Times | publisher = Times Newspapers Ltd. | date = 2006-02-27 | accessdate =2006-11-09 }}</ref> These competition rules were introduced by [[Peter Levene, Baron Levene of Portsoken|Lord Levene]] during the 1980s to shift the burden of risk to the contractor and were in contrast to "cost plus contracts" where a contractor was paid for the value of its product plus an agreed profit.<ref name="basic">{{cite web | url = http://www.basicint.org/pubs/Papers/BP50.pdf | title = The UK Defence Industrial Strategy and Alternative Approaches| accessdate = 2006-11-09| author = Dr Steven Schofield| date = March 2006| format = PDF| work = Basic Papers: Occasional Papers on International Security Policy| pages =5}}</ref> 

BAE was operating in "the only truly open defence market,"<ref>{{cite news | first = Graham | last = Warwick | title = Best of British; For years BAE Systems' identity was British, but with its investment in foreign markets increasing, change is just around the corner | work = Flight International | publisher = Reed Elsevier Inc. | page = 48 | date = 2004-06-06| accessdate = 2007-01-09}}</ref> which meant that it was competing with EADS and Thales for British defence projects, while they were protected in their home markets. The US defence market is competitive, however largely between American firms, while foreign companies are excluded. In December 2005 the MOD published the [[Defence Industrial Strategy]] (DIS) which has been widely acknowledged to recognise BAE as the UK's "national champion".<ref name="econdis">{{cite news | title = BAE Systems: Changing places | url = http://www.economist.com/world/britain/displaystory.cfm?story_id=8091318 | work = The Economist | publisher = The Economist Newspaper Limited | date = 2006-10-26 | accessdate = 2006-11-09}}</ref> The DIS identifies key industrial capabilities which must be maintained within the UK through long-term government commitments to support research spending and procurement. Of these capabilities, several are dominated by BAE, including naval vessels and submarines, armoured fighting vehicles (over 95% of the UK’s AFVs are BAE products), fixed wing aircraft, general munitions (with the exception of certain "niche capabilities abroad") and [[Network Enabled Capability]] (defined as [[C4ISTAR]] in the DIS).

After the publication of the DIS BAE Systems [[Chief executive officer|CEO]] [[Michael Turner (businessman)|Mike Turner]] said "If we didn't have the DIS and our profitability and the terms of trade had stayed as they were... then there had to be a question mark about our future in the U.K."<ref>{{cite news | first = Douglas  | last = Barrie  | title = British Defense Industrial Strategy Secures BAE Systems as U.K. Champion | url = http://www.aviationnow.com/avnow/news/channel_awst_story.jsp?id=news/12195p1.xml | work = Aviation Week & Space Technology | publisher = The McGraw-Hill Companies | date =2005-12-07 | accessdate = 2006-11-09}}</ref>

BAE now sells more to the US Department of Defense (DOD) than the UK MOD and by 2006 had become the seventh largest supplier to the DOD.<ref name="econdis"/> The company has been allowed to buy important defence contractors in the United States, however its status as a UK company requires that its US subsidiaries are governed by American executives under [[Special Security Arrangement]]s.

==Corporate governance==
As of November 2006 the members of the [[board of directors]] of BAE Systems were: [[Dick Olver]] (Chairman), [[Sue Birley]], [[Philip J. Carroll]], [[Ulrich Cartellieri]], [[Chris Geoghegan]], [[Michael Hartnall]], [[Walt Havenstein]],<ref>{{cite press release |title=Walt Havenstein to Succeed Mark Ronald as BAE SYSTEMS Inc. Head |publisher=BAE Systems |date=2006-09-12 |url=http://www.eis.na.baesystems.com/news_room/06_press/089-2006.htm |accessdate=2007-01-02}}</ref> [[Michael Lester]], [[Peter Mason]], [[Steve Mogford]], [[Roberto Quarta]], [[George Rose (businessman)|George Rose]], [[Michael Turner (businessman)|Mike Turner]] ([[Chief executive officer|CEO]]), and [[Peter Weinberg]].<ref>{{cite web| url = http://baesystems.com/aboutus/leaders.htm| title = About Us: Our Leadership | date=2006-11-02 | accessdate = 2007-01-01| work =www.baesystems.com | publisher = BAE Systems plc}}</ref> On [[2006-11-10]] BAE announced that [[Ian King (businessman)|Ian King]] would join the board on [[2007-01-01]]. King was Managing Director of [[BAE Systems Customer Solutions & Support|Customer Solutions and Support]] and was promoted to Chief Operating Officer responsible for all UK and Rest of the World business (excluding US-led businesses).<ref name="BAEKingPR">{{cite press release |title=BAE Systems appoints Ian King to Board of Directors and announces organisational changes | publisher=BAE Systems plc |date=2006-11-10 |url=http://baesystems.com/newsroom/2006/Nov/docs/327.doc |format=doc |accessdate=2007-01-01}}</ref>  Chris Geoghegan and Steve Mogford lost their status as [[chief operating officer]]s as part of this reorganisation which ''[[The Independent]]'' described as part of the "succession battle" to replace CEO Turner.<ref>{{cite news | first = Michael | last = Harrison  | title = Succession battle hots up at arms manufacturer BAE | work = The Independent | publisher = Newspaper Publishing plc | page = 48 | date = 2006-11-11 | accessdate = 2007-01-01}}</ref>

After more than 30 years with the company and its predecessors, BAE Systems' longstanding Chairman Sir Richard Evans announced his successor in March 2004. Dick Olver, formerly the deputy chief-executive of [[BP]], succeeded Evans on [[1 July]] [[2004]]. This appointment came at a significant time with stock market confidence still recovering from the shock profit warning of December 2002. 

Mike Turner replaced John Weston in 2002. Weston was forced out in a surprise "coup."<ref>{{cite news | first = Richard | last = Wachman | title = A very British coup at BAE | url = http://observer.guardian.co.uk/business/story/0,6903,676379,00.html | work = The Observer | publisher = Guardian Newspapers Limited | date = 2002-03-21 | accessdate = 2006-10-27}}</ref> It is understood that Turner, like Evans, has a poor working relationship with senior MOD officials, (for example with former Defence Secretary [[Geoff Hoon]]). Significantly the first meeting between Olver and Hoon was said to have gone well, a MOD official commented "He is a man we can do business with. We think it is good to be taking a fresh look at things."<ref>{{cite news | first =Oliver | last =Morgan | url =http://observer.guardian.co.uk/business/story/0,6903,1253225,00.html | title =BAE's Olver demands 'root and branch' change | work = | publisher =The Guardian | date =2005-07-04 | accessdate =2005-12-08}}</ref>

Reports in 2005 suggested that relations between the Chairman (Olver) and CEO (Turner) were strained. In June 2005 Turner heightened concerns of boardroom tensions by criticising Olver's knowledge of the defence industry, "[he] has a low knowledge base and knows nothing about our industry". Turner did suggest however that Olver was on a learning curve, "He'll fully understand it [in 5 years]. This is a business that takes time to understand. It's not just business, it's political."<ref>{{cite news | first =Christopher | last =Hope | url =http://www.money.telegraph.co.uk/money/main.jhtml?xml=/money/2005/06/14/cnbae14.xml&menuId=242&sSheet=/money/2005/06/14/ixfrontcity.html | title =BAE chief admits clashing with chairman over Europe | work =Daily Telegraph | date =2005-06-14 | accessdate =2005-12-05}}</ref>

==Financial information==
[[Image:BAE_Systems_revenue.PNG|right|thumb|BAE Systems revenue by division (2005). In 2004 BAE's revenue was 80% defence-based.<ref name="top100"/> This figure is now higher due to the sale of its aerostructures unit and its share of Airbus]]
{| class="wikitable" style="font-size: 95%;" align="center" 
|+'''Table 1''' BAE Systems finanical results (Source: BAE Systems [http://ir.baesystems.com/bae/fin_info/reports/annrep2005/annrep2005.pdf 2005] and [http://ir.baesystems.com/bae/fin_info/reports/annualrep02/annualrep02.pdf 2002] annual reports.)
! Year ended
! Turnover (GB£&nbsp;million)
! Profit/(loss) before tax (GB£m)
! Net profit (GB£m)
! [[Earnings per share]] (p)
|- 
| [[2005-12-31]]<sup>[i]<sup/>
| 15,411
| 845
| 555
| 22.5
|- 
| [[2004-12-31]]<sup>[i]<sup/>
| 13,222
| 730
| 3
| 17.4
|- 
| [[2003-12-31]] 
| 15,572
| 233
| 8
| 16.6
|- 
| [[2002-12-31]] 
| 12,145
| (616)
| (686)<sup>[ii]<sup/>
| 17.3
|- 
| [[2001-12-31]] 
| 13,138
| 70
| (128)
| 23.4
|- 
| [[2000-12-31]] 
| 12,185 
| 179
| (19)
| 18.8
|- 
| [[1999-12-31]] 
| 8,929
| 459
| 328
| 29.4
|}

[i]: [[International Financial Reporting Standards|IFRS]]. Other data prepared using UK [[Generally Accepted Accounting Principles|GAAP]] procedures.<br>
[ii]: Reflects GB£750&nbsp;million charges for problems with [[Hawker-Siddeley Nimrod|Nimrod MRA4]] (GB£500&nbsp;million) and [[Astute class submarine]] (GB£250&nbsp;million) programmes.

Of all the company's activities, the most profitable are the [[Al Yamamah]] contracts to supply and support the [[Royal Saudi Air Force]]. This deal has contributed substantially to BAE's profits; it was 42% in 2003,<ref>{{cite news | first =Peter | last =Spiegel | title =Negative ratings watch for BAE |page = 23 | work =Financial Times | publisher =The Financial Times Ltd. | date =2004-11-19 | accessdate =2005-02-15}}</ref> however in 2005 it was less than 18% (see graph).

==Criticisms==<!--This section needs expansion-->
[[Image:HMS Coventry F98.jpg|thumb|250px|''[[HMS Coventry]]'' was one of two frigates sold to Romania. The terms of the sale have been controversial.]] 
Like many arms manufacturers, BAE has received criticism from various human rights and anti-arms trade organisations due to the human rights records of governments it has sold equipment to. These include Indonesia, Saudi Arabia and Zimbabwe. Groups such as [[Campaign Against Arms Trade]] have criticised the company for supplying arms to [[Israel]], which they argue is guilty of human rights abuses. BAE's U.S. subsidiary makes several sub-systems for [[F-16 Fighting Falcon|F-16]]s, 236 of which have been supplied to the [[Israel Defense Forces]].<ref>{{cite news | first = Shawan| last = Jabarin | title = Stop Arming Israel | url = http://www.caat.org.uk/caatnews/CAATnews198.pdf | format = PDF | work = CAAT News | publisher = Campaign Against Arms Trade| pages = 8-9 | date = Oct/Nov 2006 | accessdate = 2006-11-02}}</ref> In September 2003 ''[[The Sunday Times (UK)|The Sunday Times]]'' reported that BAE had hired a private security contractor to collate information about individuals working at the Campaign Against Arms Trade and their activities.<ref>{{cite news | title = How the woman at No 27 ran spy network for an arms firm | work = Sunday Times | publisher = Times Newspapers Limited | page = 10 | date = 2003-09-28| accessdate = 2006-11-28}}</ref>

BAE (and British Aerospace previously) has long been the subject of allegations of bribery in relation to its business in Saudi Arabia (through the [[Al Yamamah]] contracts). An earlier contract, the BAC sale of arms in the 1970s including [[English Electric Lightning|Lightning]] fighters, involved "commission" payments of GB£100&nbsp;million.<ref name="SFO">{{cite news | first =David | last =Leigh | coauthors =Evans, Rob| url =http://www.guardian.co.uk/armstrade/story/0,,1828253,00.html | title =Parliamentary auditor hampers police inquiry into arms deal | work =The Guardian | publisher = Guardian Newspapers Ltd. | date =2006-07-25 | accessdate =2006-08-12 | language = }}</ref> The company has been accused of maintaining a GB£60&nbsp;million Saudi [[slush fund]] and was the subject of an investigation by the [[Serious Fraud Office]] (SFO).<ref>{{cite news | title = BAE included in SFO investigation | url = http://news.bbc.co.uk/1/hi/business/4020905.stm  | publisher = BBC News | date = 2004-11-17 | accessdate = 2006-10-27}}</ref> The UK [[National Audit Office (United Kingdom)|National Audit Office]] investigated the contracts and has so far not published its conclusions - the only NAO report ever to be withheld. In July 2006 ''The Guardian'' reported that the [[Comptroller and Auditor General]] (head of the NAO) had refused requests by the Ministry of Defence Police and the Serious Fraud Office to see the report. In response to the reports the MOD stated "The report remains sensitive. Disclosure would harm both international relations and the UK's commercial interests."<ref name="SFO" /> However on [[14 December]] [[2006]] it was announced that the Serious Fraud Office was "discontinuing" its investigation into BAE. It stated that representations to its Director and the Attorney General had lead to the conclusion that the wider public interest "to safeguard national and international security" outweighed any potential benefits of further investigation.<ref>{{cite news | title = Probe into BAE's Saudi defence deal dropped | url = http://today.reuters.co.uk/news/articlebusiness.aspx?type=businessNews&storyID=2006-12-14T181242Z_01_WLA6589_RTRUKOC_0_UK-BAE-SAUDI.xml | publisher = Reuters | date = 2006-12-14 | accessdate = 2006-12-14}}</ref>

In September 2005 ''[[The Guardian]]'' alleged that banking records showed that BAE paid GB£1&nbsp;million to [[Augusto Pinochet]], the former Chilean dictator.<ref name="Pinochet">{{cite news | first = David | last = Leigh | coauthors = Evans, Rob | title = Revealed: BAE's secret £1m to Pinochet | url = http://www.guardian.co.uk/chile/story/0,13755,1570335,00.html | work = [[The Guardian]] | publisher = Guardian Newspapers Ltd. | date = 2005-09-15 | accessdate = 206-10-27}}</ref>''The Guardian'' has also reported that "clandestine arms deals" have been under investigation in Chile and the UK since 2003 and that British Aerospace and BAE made a number of payments to Pinochet advisers.<ref>{{cite news | first =Jonathan | last =Franklin  | author = | coauthors =| url =http://www.guardian.co.uk/chile/story/0,,1818423,00.html | title =Pinochet and son deny selling cocaine to Europe and US | work =The Guardian | publisher =Guardian Newspapers Ltd. | date =2006-07-12 | accessdate =2006-08-14 | language =English }}
</ref>

BAE has been criticised for its role in disposing of surplus [[Royal Navy]] warships. [[HMS Sheffield (F96)|HMS ''Sheffield'']] was sold to the Chilean Navy in 2003 for GB£27&nbsp;million, however the government's profit from the sale was GB£3 million after contracts worth GB£24&nbsp;million were placed with BAE for upgrade and refurbishment of the ship. BAE is alleged to have paid "secret offshore commissions" of over GB£7&nbsp;million to secure the sale of [[HMS London (F95)|HMS ''London'']] and [[HMS Coventry (F98)|HMS ''Coventry'']] to the Romanian Navy. BAE received a GB£116 million contract for the refurbishment of the ships.<ref>{{cite news | first =David  | last =Leigh  | author = | coauthors =Evans, Rob | url=http://www.guardian.co.uk/armstrade/story/0,,1797639,00.html | title =Bribery inquiry may force £7m refund to Romania | work =The Guardian | publisher =Guardian Newspapers Ltd.| date =2006-07-15 | accessdate =2006-08-14 | language = }}</ref>

BAE Systems does not manufacture land mines. While it does not directly manufacture [[Cluster bomb|cluster munitions]], it received a contract for 26,000 155 mm L20 cluster artillery shells in November 2002 with manufacture subcontracted to [[Israel Military Industries]]. Armed Forces Minister [[Adam Ingram]] explained that BAE's involvement came from the fact that "BAE Systems [was] able to negotiate favourable rates for the shell."<ref>{{cite hansard |url=http://www.publications.parliament.uk/pa/cm200304/cmhansrd/vo040209/text/40209w09.htm | house=House of Commons | date=2004-02-09 | column=1174W}}</ref>

In January 2007 BBC News highlighted concerns of arms campaigners regarding arms sales to South Africa. BAE Systems, which sold [[BAE Hawk|Hawk trainers]] and [[JAS 39 Gripen|Gripen]] fighters to the country, is again under investigation by the SFO.<ref>{{cite news | title = BAE South African deal 'probed'  | url = http://news.bbc.co.uk/1/hi/business/6255725.stm | publisher = [[BBC News]] | date = 2007-01-12 | accessdate = 2007-01-12}}
</ref>

==Organisation==
*[[BAE Systems Air Systems]] (Military aircraft projects)
*[[BAE Systems Integrated System Technologies]]
*[[BAE Systems Customer Solutions & Support]]
*[[BAE Systems Naval Ships]]
*[[BAE Systems Inc.|BAE Systems Inc]] (formerly BAE Systems, North America)
**[[BAE Systems Land and Armaments|BAE Systems Land and Armaments Operating Group]] (OG)
**[[BAE Systems Customer Solutions|BAE Systems Customer Solutions OG]]
**[[BAE Systems Electronics and Integrated Solutions|BAE Systems Electronic & Integrated Solutions OG]]
*[[BAE Systems Regional Aircraft]]
*[[BAE Systems Shared Services]] (group resource management etc.)
*[[BAE Systems Submarines]]
*[[BAE Systems Underwater Systems]]
*[[BAE Systems Platform Solutions]]

==Joint ventures etc.==
[[Image:Typhoon.t1.zj807.arp.jpg|thumb|250px|A BAE&ndash;assembled [[Eurofighter Typhoon]] [[Eurofighter Typhoon variants|T1]]. BAE is a partner in [[Eurofighter GmbH|Eurofighter Jagdflugzeug GmbH]], the multinational company that coordinates the design, production and upgrade of the aircraft.]]
BAE's shares in [[Panavia Aircraft GmbH]] (37.5%) and [[Eurofighter GmbH|Eurofighter Jagdflugzeug GmbH]] (33%) represent its involvement in the Panavia Tornado and Eurofighter Typhoon projects. BAE is involved in production of the export version of the [[Saab Gripen]] and owns 50% of Gripen International KB, the company responsible for marketing of the aircraft. BAE inherited a 35% share in [[Saab|Saab AB]] from British Aerospace. This was reduced to 20.5% in January 2005.

Other shareholdings include 37.5% of [[MBDA]], 25% of [[SELEX Sensors and Airborne Systems]], 50% of Flagship Training Limited and 50% of [[Fleet Support Limited]] (a joint venture with [[VT Group|VT Group plc]]).

==See also==
* [[European defence procurement]]
* [[Team McLaren|Team McLaren Mercedes]], for which BAE Systems is a technology partner

==References==
{{reflist|2}}

==External links==
*[http://www.baesystems.com/ BAE Systems web site] 
*[http://www.corporatewatch.org.uk/?lid=182 www.corporatewatch.org.uk: BAE Systems profile]
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