How Does BAE System Company Work?

BAE Systems' operations are diverse, covering air platforms like the Eurofighter Typhoon, maritime assets such as Astute-class submarines, and land systems including Bradley Fighting Vehicles. The company also excels in electronic systems, cyber, and space capabilities.

The company's business model involves highly integrated processes from advanced manufacturing and technology development to global sourcing and intricate logistics. Direct sales, often through government-to-government agreements, are a key channel.

BAE Systems is committed to digital transformation and advanced manufacturing, investing over £1.0 billion in capital expenditure in 2024. This investment aims to increase capacity and modernize systems across its facilities.

Crucial partnerships are a cornerstone of BAE Systems' strategy, including joint ventures for next-generation fighter jets with international allies. The company collaborates with numerous firms, such as the 76 companies involved in the Global Combat Air Programme in the North West of the UK.

In February 2024, BAE Systems completed the substantial $5.5 billion acquisition of Ball Aerospace, now integrated as Space & Mission Systems (SMS). This move significantly enhances BAE Systems operations in space technologies, including satellites and optical instruments, positioning it for accelerated sales growth.

The company is advancing next-generation fighter jets through the Global Combat Air Programme (GCAP) with Italy and Japan, formalizing a joint venture in 2024. Flight trials for the new Typhoon radar, ECRS Mk2, also commenced in 2024, showcasing BAE Systems innovation in military technology.

Significant contract awards in 2024-2025 include a $251 million U.S. Navy contract for AEGIS support and an $85 million contract for Network Tactical Common Data Link (NTCDL) systems. Additionally, a $356.7 million contract modification for Armored Multi-Purpose Vehicles (AMPVs) for the U.S. Army highlights BAE Systems' project management process.

Despite supply chain disruptions and inflation, BAE Systems achieved double-digit growth in 2024. Its competitive edge is built on strong brand loyalty, established government relationships, and technological leadership in areas like AI and quantum sensors, contributing to its resilience in the BAE Systems defense industry.

BAE Systems is a leading global defense contractor, holding the seventh position by revenue. Its diverse portfolio covers air, land, sea, cyber, and space, bolstered by a substantial £77.8 billion order backlog in 2024. The company benefits from strong customer loyalty and a significant global footprint across over 40 countries.

The company faces risks from regulatory shifts in defense spending and export controls, alongside intense competition from major defense firms. Technological advancements also present a challenge if innovation pace falters, and geopolitical uncertainties can impact funding. Integrating acquisitions, like Ball Aerospace, also introduces operational and financial considerations.

The outlook for BAE Systems is positive, with projected revenue growth of 7%-9% in 2025, potentially exceeding £30 billion. Underlying EBIT is expected to increase by 8%-10% from £3.02 billion in 2024. Strategic investments in people, facilities, and technology, alongside a focus on innovation in areas like AI and quantum sensors, are key to its future strategy.

BAE Systems is committed to long-term program delivery and portfolio enhancement in high-growth, strategic markets. This includes capitalizing on increased global defense budgets and developing advanced technology solutions. The company's Revenue Streams & Business Model of BAE System is designed to adapt to the evolving defense and security landscape.