Daily Management Review

British Aircraft Manufacturers to Reduce Production and Staff


Two British companies specializing in the aircraft sector - defense corporation BAE Systems and aircraft engine manufacturer Rolls-Royce - have reported worsening results and job cuts. BAE Systems announced their intention to halve production of one of the most famous aircrafts – the fighter Eurofighter Typhoon.

Andrew P Clarke
Andrew P Clarke
British defense company BAE Systems reported double reduce in Eurofighter Typhoon production due to low demand. According to the company, it is expected that the fighter’s sales will fall to £ 1,3 billion ($ 1.98 billion) this year to £ 1,1 billion ($ 1.67 billion) in 2016. Together with the companies Airbus Group and Finmeccanica SpA, BAE Systems has been manufacturing the aircraft since 1986. In connection with the production’s slim down, the company plans to lay off 371 employees. Total number of the company’s staff is now about 13 th. employees in the UK. BAE Systems are also going to cut 200 jobs at the plant in Australia. As stated analyst Nick Cunningham of the Agency Partners LLP, "the impact of Eurofighter’s slowing sales might not be as bad in the short term, as we had feared. In fact, Typhoon is only responsible for 14% of BAE’s revenue, and improved prospects for the US and the UK defense contracts can help the company's business."

Yesterday, it also became known that Rolls-Royce, manufacturer of aircraft engines, reported a possible reduction of the dividend for 2015 due to rising costs and deteriorating outlook for profits. The company reported that their profit before tax in the current year will be at the lower end of the range. Earlier analysts predicted the range £ 1,33 billion - £ 1,48 billion (from $ 2.02 billion to $ 2.25 billion). In this regard, the company also announced their intention to reduce the 2 th. jobs. According to experts, Rolls-Royce is suffering primarily due to lower demand for business jets in China, Southeast Asia and Brazil. Besides, drop in revenues from servicing engines for large aircraft plays its role, too. Rolls-Royce shares fell 22% yesterday, is the sharp fall in one day for the last 15 years.

source: theguardian.com