It said that actions are being taken to reduce the group’s current Typhoon production rate “to ensure production continuity at competitive costs over the medium term”.
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The shares jumped 4pc as the company said it expected full-year earnings per share to be flat at 38p, easing concerns that the company would be hit by failure to secure a Saudi Arabian order for the Typhoon jet fighter.
In a statement, the company offered a relatively positive outlook for the future: “In the United Kingdom, budget commitments to defence spending provide greater certainty and stability ahead of the forthcoming 2015 Strategic Defence and Security Review”.
BAE Systems added that it continues to achieve good growth in its businesses in adjacent commercial markets including cyber security and commercial electronics.
The group is scaling back the Typhoon production line earlier than planned due to low order volume, which it said would have an impact on 2015 financial results, with Typhoon production sales expected to drop from around £1.3 billion in 2015 to around £1.1 billion in 2016.
BAE is also cutting jobs in Australia and will book a non-cash impairment on the value of its Williamstown shipyard assets in the country in 2015.
BAE rose as much as 11.8 pence, or 2.7 percent, to 450.1 pence in London, reducing the decline this year to about 4.5 percent.
The company said it hoped to avoid compulsory job losses.
Ian Waddell, national officer for union Unite, said: “This is disappointing news on top of a miserable few weeks for manufacturing in the UK”. It is vital that critical skills and capability are maintained by BAE Systems and their supply chain so that the ability to build the Typhoon in the United Kingdom is protected.
“Cutting too far, too fast could lead to a skills shortage for when orders pick up”.
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BAE Systems makes the Typhoon and the Hawk trainer jet at its sites at Samlesbury and Warton and also parts of the American F-35. Current orders mean BAE’s Typhoon production line is scheduled to run out of work in 2018. “The Government urgently needs to get a grip and stand up for high-skilled British defence jobs”.
