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Back to the drawing board for BAE

Thursday, October 11, 2012 - 01:57

Oct. 11 - BAE Systems warns it faces uncertainty in its core market, the United States, after the collapse of talks with EADS, how much damage has the failed mega merger done to both companies and their bosses? Sonia Legg reports

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TV AND WEB RESTRICTIONS~**NO ACCESS UK/ABC (Aust)/TVNZ/.CO.UK SITES (Internet)** It employs more people in Britain than any other manufacturer but the 35,000 employees of BAE Systems are now wondering where their next jobs will come from. The aerospace firm earns nearly half its revenue selling arms to the Pentagon. After failing to secure a $45 billion merger with EADS it's now warning of uncertainty in that core market. Sash Tusa is a defence analyst. (SOUNDBITE) (English) AEROSPACE AND DEFENCE ANALYST AT ECHELON, SASH TUSA, SAYING: "Pandora's box has been opened. BAE can't go back to where it was a month ago. If they can't find other work in exports we are going to see cuts continuing over the next couple of years. It has been several thousand in the past year alone and I think a continuation of that is a possibility." Many EADS shareholders expressed relief at the collapse of the deal. They'd had concerns about a successful civilian planemaker venturing into a declining defence market. And BAE has certainly come off worse. (SOUNDBITE) (English) AEROSPACE AND DEFENCE ANALYST AT ECHELON, SASH TUSA, SAYING: "I think ultimately there are probably two options that we will see. Either that they break themselves up, or that they look for some sort of deal with a U.S. company." The firm's CEO Ian King denies being under pressure following negative investor reaction. And its Chairman Dick Olver says it's business as usual. But David Reeths from IHS Janes believes that's not now possible. (SOUNDBITE) (English): DAVID REETHS, IHS JANES, SAYING (English): "They certainly look like they are looking to make some significant moves and so I am sure they will have discussions with other potential partners and look at other ways they can potentially strengthen their business." King named Saudi Arabia and Oman as two growth areas. And it's recently secured a contract with South Korea. But many believe there may even be another attempt to link up with EADS once the dust from this failed bid finally settles. Sonia Legg, Reuters

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Back to the drawing board for BAE

Thursday, October 11, 2012 - 01:57