BAE raises £106m by selling stake in Astrium

BAE Systems yesterday raised £106m by agreeing to sell its 25 per cent stake in the Astrium satellite joint venture to its partner, the European aerospace and defence company EADS.

The move came as EADS and BAE agreed to form a joint venture to tackle the requirements of the Ministry of Defence's Skynet 5 military communications satellite programme. BAE will have control of the UK operations of the joint venture, Paradigm Secure Communications, but will contract the manufacture and provision of satellites and ground systems to Astrium.

Astrium, one of the companies involved in the Galileo satellite-tracking project, is already 75 per cent owned by EADS and has sales of €1.9bn (£1.2bn) and 8,400 employees, of whom a quarter are in the UK.

News of the deal came as EADS lifted its forecast of operating profits for the year by 20 per cent after first-half earnings exceeded expectations. The company, the second biggest aerospace and defence group in the world, made a profit before tax and interest of €775m, thanks to a strong contribution from Airbus, the civil aircraft maker in which it holds an 80 per cent stake.

Despite the downturn in the civil aviation market following 11 September, Airbus increased first-half operating profits to €874m. However, EADS warned that its second-half performance would not be as good due to lower aircraft deliveries and increased research and development costs, mainly on the new Airbus A380 super jumbo. Deliveries are expected to reach 300 for the year.