BAE still pondering sale of shipbuilding arm

Mike Turner, chief executive of BAE Systems, said recently his company was still considering selling its shipbuilding operations because they remained unprofitable and had a negative impact on the company’s share price.

BAE acknowledged in April that it was “reviewing its options” in its shipyards business although there has been speculation the company would back away from such a sale in order to remain the UK’s prime defence contractor in the air, and on sea and land. Turner said a team was still reviewing a possible sale, emphasising that retaining the yards remained an option despite received interest from potential buyers.

People close to US shipbuilder General Dynamics, which works with BAE on its submarine programme, said Nicholas Chabraja, GD chief executive, had ruled out a bid. Executives at Paris-based Thales have also expressed scepticism, believing the UK yards are unlikely to go to French or German buyers. The sensitive nature of the submarine business, which provides the UK’s independent nuclear deterrent, and its close interaction with the US Navy would suggest a Pentagon block on a sale to continental allies.

Without a foreign buyer, most speculation has focused on VT Group, which has expressed some interest in individual shipyards. The company could also bundle its shipbuilding business into a joint venture with BAE’s yards.