BAE Systems: poor defence

Until recently, BAE Systems has enjoyed preferred status with its main client, the British government, but cost overruns on crucial projects have soured that relationship. As well as industry-wide concerns over rising debt and pension deficits, further ratings downgrades may be in the offing

BAE Systems, the UK defence company, appears incapable of capitalising on the possibility for war. In late February, Fitch Ratings downgraded the company’s credit rating to BBB+ from A-, and maintained a negative outlook.

BAE’s problem is that it is working on two large defence contracts for the British government, both of which BAE is receiving a fixed amount for and both of which are