BAE Systems

The Aircraft of British Aerospace and BAE SYSTEMS 1977 - 2017 11

From British AerospAce to BAe sYstems 19 77-

BAe flies into turbulence
and looks for partners
In September 1991, British Aerospace’s
profits slumped and the company had to
increase the pace of rationalisation and
restructuring of its businesses in the face
of constrained UK defence spending,
brought about by the end of the Cold
War. BAe began considering possible
disposals or partners for its core
businesses. During 1992 matters with
Regional Aircraft worsened, as many of
BAe’s airliners were returned off lease at
reduced values. The Rover Group’s cars
were also doing extremely badly but
there were strong, growing sales from
Airbus.
The following year matters worsened,
there were substantial redundancies, the
closure of Hatfield and the sale of the
Hamble factory, but the share price
continued to decline. The real problem
was with the Regional Aircraft Division
with its large losses. BAe came close to
ruin as it was hit by this financial crisis
brought on by the potential financial
exposure to its regional aircraft lease
book. There were concerns that the
company might collapse, even though
many of its products were on a firm
footing with plenty of orders, for example,
Tornado, (which received a repeat order
from Saudi Arabia in late 1992), Hawk,
Harrier and the Sea Eagle missile.

The company flies
into calmer air
BAe’s Corporate Jets Division which
produced the 125 executive jet range was
making many sales so as part of the
programme to improve BAe’s finances, it
was sold to Raytheon for £250 million in
mid-1993.
Considering that after its many
troubles, BAe was only valued at £1bn,
the sale of the 125 Programme for a
quarter of this amount was a great benefit

to the firm. Some felt it was a shame for

BAe to sell its only clearly profitable civil

programme.

At the beginning of 1994, BAe

disposed of Rover Group, the

troublesome car manufacturer it had

bought in 1988 and sold it to German

volume car maker BMW for £800m.

Another disposal was BAe Space Systems

which was sold to Matra Marconi Space

in 1996. With these disposals and the

closure of sites the company was now on

a sound financial footing.

BAe’s civil airliner closures

Though the company had now resolved

many of its immediate financial problems,

the ATP, which was the company’s 748

replacement, had made little headway in

the market and was being outsold by the

Franco-Italian ATR42 and ATR72. From the

beginning of 1993, the loss-making ATP

was transferred to Prestwick and it was

renamed the Jetstream 61 as part of the

Jetstream family along with the Jetstream

31 and 41 that were already in

production there. In this way, all

turboprop airliner production was at a

single site. This move tidied up BAe’s

turboprop range and was designed to

make them more attractive to a partner.

This transfer did little for the rebranded

Jetstream 61 and when BAe joined a

pan-European regional aircraft

consortium - Aero International

(Regional), the Jetstream 61 was in direct

competition with the ATR family and

production ended in 1995.

Production of the 19-seat J31 had

already effectively ground to a halt,

leaving Prestwick with only the J41.

Orders for the Jetstream 41 the 30-seater

successor to the Jetstream 31, had

proved very erratic and finding that it

could only sell aircraft at a loss the

company ended production,

withdrawing entirely from the turboprop

airliner market in 1997. Besides its very

profitable 20% holding in Airbus, for

which BAe built 187 wing sets in 1997, its

portfolio of civil aircraft was now reduced

to just the 146, by now renamed the RJ

(Regional Jet), which delivered 22 aircraft

from Woodford in the same year.

Space Systems

Just to illustrate the whirligig that

company acquisitions and disposals can

create. In 1994 British Aerospace Space

Systems was sold to Matra Marconi

Space. Yet in 1999 BAe regained an

interest in the company when it merged

with GEC’s Marconi Electronic Systems to

form BAE SYSTEMS. In 2000, Matra

Marconi was merged with the space

division of DaimlerChrysler Aerospace

(DASA) to form Astrium. BAE sold its 25%

stake in June 2003 and the company

became EADS Astrium and in 2013 Airbus

Space and Defence.

ˆ HMS Artful under

construction at

BAE’s factory at

Barrow-in-Furness.

It is the third

member of the

Astute class and is a

300ft long, 7,

ton, nuclear-

powered,

Hunter-Killer

submarine. It carries

torpedoes and

Tomahawk missiles.

(BAE SYSTEMS)

†

BAe Nimrod MRA4 development aircraft PA2 ZJ518 which

made its maiden flight from Woodford to Warton on 12

December 2004. (BAE SYSTEMS via Warton Heritage)