British Fighter Jets In Trouble

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What's going on?

Britains BAE Systems, one of the worlds largest defense companies (that makes nuclear submarines and drones, among other things), announced a plan to streamline its business on Tuesday adding BAE to a list of global defense giants slashing jobs.

What does this mean?

Slowing demand for the Eurofighter Typhoon, which BAE makes in partnership with two other defense companies, appears to be the main driver of the move. For one, there have been fewer orders for the Typhoon this year than for its French rival, the Rafale. In addition, analysts say BAE had largely pinned its hopes on major Typhoon orders from Saudi Arabia and Qatar, but the status of these orders is uncertain…

BAEs new CEO, who just joined in July, is evidently wasting no time in trying to make the business more efficient. The restructuring involves almost 2,000 job cuts (mainly in BAE’s aircraft division, which accounts for half of its sales).

Why should I care?

The bigger picture: Britains capabilities in combat aircraft are in question.


BAE insists the restructuring will merely slow down production rather than remove its ability to develop a new generation fighter jet. But, regardless of the job cuts, this depends on new orders emerging in the future. At the moment, once the backlog of orders for the Typhoon clears, the UK will not have a new fighter jet program, which raises questions about its security capabilities (in matters of defense, countries prefer to make their own weapons and aircraft, so they dont have to depend on others in tough times).

For markets: Defense companies are cutting jobs globally.


BAEs job cuts will mainly affect jobs in the UK. Meanwhile in the US, major defense companies Lockheed Martin and Boeing have also announced job cuts as they face tough competition and pressure from governments to reduce their prices. It seems that everybody is feeling the squeeze.

Originally posted as part of the Finimize daily email.

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