BAE Systems in move to plug £1.9bn hole in its pension pot

BAE Systems shares rose after the defence giant hailed a “year of significant progress” with the company showing strong results and announcing a new deal under its pension.

The business saw revenue reach

£18.3 billion, an increase of seven per cent, in 2019, chief executive Charles Woodburn told the London Stock Exchange. Operating profit, meanwhile, grew to nearly £1.9bn, up 18% year on year.

Mr Woodburn said: “We delivered a good set of financial results in line with guidance, growing sales and earnings, with improved operational performance and increased investment in the business to underpin our growth outlook.”

Apart from in aerospace, BAE’S largest business unit which accounted for around 40% of profit, operating profit grew in all business areas. The company operates in electronic systems, cyber and intelligence, platforms and services, and maritime.

During the year BAE signed a new deal to accelerate its delivery of the Typhoon fighter jet to Qatar. It confirmed a deal to provide Hawk training aircraft to the country’s military.

Construction also started on second of the three contracted Type 26 frigates in August, the company said.

Workers at its bases in Scotstoun and Govan currently have orders for three Type 26 frigates initially with a commitment for another five, which would last until the 2030s.

BAE Systems also told shareholders that it had reached a new deal with its pension trustees to help plug a £1.9bn hole in its pension pot.

The business will now make a one-off payment of £1bn into the fund “in the coming months”.

This will come alongside a £240 million payment over the course of the year ending

March 2020, and a further £250m over the following 12 months.

Mr Woodburn also said: “Strategically we took a number of actions to strengthen the portfolio, and the pensions agreement announced today is good for all stakeholders.”

Shares rose by 2.6%, or 16.4p, to 656.4p.