Hudson will be BAE's new boss in North America

BAE Systems has appointed a new head for its US operations, as the British defence contractor fights to salvage one of its biggest contracts with the Pentagon.

Linda Hudson, 59, who previously ran the company's land and armaments division, has been promoted to chief executive of BAE Systems Incorporated. She oversaw BAE's acquisition of Armor Group, which made military trucks, under the US Army's multi-billion dollar medium tactical vehicles programme, only to see that contract go to a smaller US rival earlier this year.

BAE is campaigning to get the decision reversed, alleging irregularities in the procurement process. The decision to promote Ms Hudson, who was named in Fortune magazine as one of the 50 most powerful women in business, suggests the company is going all-out in its battle to save the deal, despite political pressure to back down.

She replaces Walt Havenstein, who was lured away from BAE in June. Anthony Zinni, a retired general who had been running BAE Incorporated temporarily since then, will remain as its chairman.

Ms Hudson's appointment comes at a sensitive time for BAE in the US, where the company earns more than half of its revenues. It has fallen from fourth to eighth in the league table of the Pentagon's biggest contractors, taking a smaller share of a shrinking pie. The defence department is reviewing major procurement plans in an attempt to save money.

Rivals have been beefing up their management in an attempt to salvage business. EADS, the European defence contractor, last week picked Sean O'Keefe, a former head of the US space agency Nasa, to be the chief executive of EADS North America.