BAE warns over shutdown in States

AEROSPACE and defence giant BAE Systems has warned that a continued US government shutdown due to the protracted debate about the debt ceiling could begin to hurt its business.

The FTSE 100 group said the financial impact from the partial shutdown was yet to be ‘material’ to its US business but risked having ‘some progressive impact’ if it drags on.

BAE (up 10.7p at 450.7p) said around 1,200 of its US intelligence, security and support staff, who are typically embedded in government operations, were told not to turn up for work from October 1. Their wages were until last Friday being paid by the company, but BAE has warned that cannot continue indefinitely.

Some 30,000 BAE staff work on US programmes, from cyber security to armoured vehicles.

Europe’s largest defence contractor also warned this year’s profits could slip if price negotiations over an order for Typhoon jet fighters from Saudi Arabia extend beyond 2013.

While BAE continues to expect a ‘satisfactory completion’ this year to the long-delayed Salam talks, it said failure to agree higher prices for 72 Eurofighter Typhoons would hit earnings.

Meanwhile, BAE said it continues talks with the UK’s Ministry of Defence to ‘balance naval surface shipbuilding capacity with future warship demand’.