BAE systems profits double but must boost pensions

The wars in Iraq and Afghanistan have meant a continued demand to BAE Systems, the biggest defence company in Europe.

With armoured vehicles, battlefield radios and bullet-proof vests, its biggest sellers, profits have increased by 94 percent.

The 2009 projections are also anticipated to be strong, although there is likely to be a reduced demand for land vehicles, trading results are likely to be boosted by the fall of Sterling against the US dollar.

From the news released today, the company announced that the order book increased to £46.5 billion from £38.6 billion.

Despite the healthy profits the company pension fund had increased from £2 billion to £4.2 billion because of falling markets and, as a result, the company has had to make extra payments of more than £500 million to its pension schemes.

This is seemingly not going to be just a one-off payment into the pension fund as the shortfalls are heading into 2009 as well, with £172 million needed to be added to its US pension schemes above the regular payments.

The company is also expecting to pay another £132 million into the pension schemes for the companies that will be acquired this year.

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