BAE Systems New Chairman Says Civil Expansion Not Top Priority

BAE Systems Plc incoming Chairman Roger Carr said expanding Europe’s largest defense company into commercial markets is not his top priority as pressure remains to manage costs.

Branching out into non-military activities is “not the first move I’d make as chairman,” Carr told Bloomberg Television in Davos at the World Economic Forum ahead of taking on the role at London-based BAE on Feb. 1. Carr, 67, joined the BAE board in October and is succeeding Dick Olver at the helm of the board, who held the post for almost a decade.

Carr’s comments give the first hint at the direction he will take at London-based BAE Systems, which explored a merger with commercial-jet maker Airbus Group NV in 2012 that failed on German government opposition. The U.K. defense company has sought to grow in commercial aircraft electronics and civil cyber-security amid stagnant military spending in the West.

The downward spending trend in the U.K. and U.S., the largest markets for the maker of Typhoon combat jets and Bradley armored fighting vehicles, will require a continued emphasis on managing cost, Carr said.

The Middle East and Australia represent good export markets, he said, adding that a budget accord in the U.S. means spending declines there are not as severe as first feared.

BAE Systems has announced a series of job cuts in the U.S. and U.K. to bring its costs down ahead of spending declines. The company announced on Nov. 6 that it would end shipbuilding at the historic Portsmouth, England yard and eliminate 1,775 jobs.

The company, which had sales of 17.8 billion pounds ($29.5 billion) in 2012, does about $1.4 billion in civil business, Chief Executive Officer Ian King said yesterday. It won orders last year for equipment on Boeing Co. commercial jets and lifted its U.K. cyber-security order book by more than 10 percent, according to the CEO.

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