Aircraft cuts will dent our plans, warns BAE

BAE Systems has warned that its growth in 2010 will be weaker than expected following the Government's review of defence and security spending. The company plans to work with the Ministry of Defence to address the implications of the changes, but said it anticipated some modest impact on the performance of its UK business this year. It has also reduced its financial planning assumptions for the following years.

The Coalition's decision to scrap the Royal Navy's Harrier jump-jets and the RAF's Nimrod transport aircraft will affect BAE's military air division, although naval operations have benefited from a commitment to continue building two aircraft carriers and an order for seven Astute class submarines.

BAE said: "The detail... will take some time to refine but the group welcomes the removal of a number of uncertainties which have been overhanging the business in recent months."

It said Trinidad and Tobago's cancellation of an order for an offshore patrol vessel was likely to result in a charge of up to £150m.