BAE Systems Seals US Navy $400m Deal

BAE Systems sealed its third major military deal in a week, after it won a $400m contract to maintain and service more than 300 US Navy trainer aircraft.

The five year agreement is the latest in a line of contracts it has signed in a week, after it scored a £1.2bn ($1.9bn/ €1.5bn) deal with the UK's Ministry of Defence (MoD) to design and manufacture the submarine HMS Audacious, as well as receiving a $35m order from the US Defense Logistics Agency (DLA) for the production of tactical vests equipped with body armor.

BAE said the US Navy deal, which includes an initial base term plus multiple options would help it expand its services business, as it covers inspections, repairs and logistical support for the Navy's T-34, T-44 and T-6 trainer aircraft, would help it expand its services business.

The contract is another major score for shareholders this week, since talks with EADS collapsed in October this year, in what would have been the world's largest defence and aviation merger.

BAE met strong opposition to the tie-up from analysts, shareholders and politicians, as they believed that the potential $45bn deal could lead to state interference, poor terms and a lack of strategic rationale that could, in turn, hurt the British defence company's long term company health, as the merger with EADS could have a negative impact on BAE's unique position in the US.

Although BAE is a UK-listed company, it derives nearly half of its global revenue from its largest customer; the US military. The deals have also placed it among the biggest foreign companies in the US defence sector.

Shares are trading flat in the early session at 338.40p but it up nearly 19 percent year to date.