BAE and VT in limbo as £3.5bn aircraft-carrier deal is delayed again

The Government won't give its final approval for the construction of two new aircraft carriers until at least October, according to industry sources. That would push the £3.5bn project nearly a year behind schedule.

BAE Systems and VT have agreed to merge their shipbuilding assets into a new joint venture, but will not go ahead with that deal until the carrier programme is approved. The companies had been hoping to get government approval last year, but the announcement was repeatedly postponed as the Ministry of Defence and the industrial groups haggled over the final price for the ships. The MoD also wanted firm commitment to naval consolidation before it would proceed with the project. The decision was then delayed until the hand- over of the premiership from Tony Blair to Gordon Brown.

The other companies that will design and build the 65,000-ton ships are Thales, Kellogg, Brown & Root and Babcock International.