Move Anticipates Tightening of UK and American Defense Budgets

Bracing for what many analysts see as shrinking defense spending by both the United States and the UK, BAE Systems has put parts of its US commercial aerospace business up for sale for as much as $2 billion, according to both The Wall Street Journal and The Guardian.

The company, which is one of Europe's largest defense contractors, cut 1,000 jobs from its military aircraft division last week. The division makes parts for the Tornado, Harrier jump jet and Hawk trainer jets.  As reported by the Guardian, BAE blamed UK defense budget cuts, and it is also positioning itself for slow defense spending in the United States as well.

The divisions that have been selected for sale are the units responsible for building aircraft engine controls for General Electronics and hybrid propulsion systems for busses and trucks, and also include a commercial avionics business, reports say.

Initial offers are expected this week and Business week reports that "potential buyers have already received information and bids for assets are due within the month."

The Guardian reports BAE makes more than half its profits from the United States, one of the largest purchasers of defense equipment in the world.

FMI: http://www.baesystems.com