BAE SYSTEMS Reorganisation Increases Support Business Focus.

Business Editors

LONDON--(BUSINESS WIRE)--June 20, 2001

An internal re-organization within BAE SYSTEMS has underlined the company's growing focus on services, solutions and support.

The changes in the Customer Solutions & Support Group include the transfer of the Tornado and Harrier programs from the Programs group and the creation of Training Solutions and Australian support businesses.

The changes will provide clear business focus and sustain key objectives including:

-- Delivering on the agreement signed with the UK's Defence Logistics
Organisation last July in which BAE SYSTEMS agreed to assist in achieving the
DLO's 20 per cent cost reduction target in exchange for business growth

-- Targeting global outsourcing of military services, solutions and support,
currently estimated to be worth around $150bn pa.

Customer Solutions & Support's Group Managing Director Ian King comments: `The two objectives are linked: our intention is that responsibility for a product will move from BAE SYSTEMS' Programmes Group to CS&S when in-service support activity dominates.

This mirrors the way the MOD transfers responsibility from the Defence Procurement Agency to the Defence Logistics Organisation as equipment moves from the acquisition to support phase.

`The support solutions we are currently developing in a new spirit of partnership with the DLO, plus a wide range of other support capabilities we are bringing together, will underpin our response to the growth in the global services, solutions and support market.'

Notes to editors:

Customer Solutions & Support now consists of six businesses, each focused on a key support area under the control of a managing director. They report directly to group managing director Ian King.

Military Air Solutions and Support

Chris Boardman transfers from BAE SYSTEMS' Programmes organization to head up Military Air Solutions and Support. In addition to Tornado and Harrier he takes on responsibility for the company's other military aircraft in service with UK armed forces including Jaguar, VC10 and Nimrod MR2. He is also responsible for the company's AV8B Harrier and T45 Goshawk activity in partnership with Boeing.

Responsibility for BAE SYSTEMS' element of its joint bid for the (pound)13bn UK Future Strategic Tanker Aircraft (FSTA) requirement also falls into his remit.

Training Solutions

Andrew Davies has been appointed from within CS&S to leverage the company's platform experience into providing a focus for all military training activity, a major potential growth area. He takes responsibility for the DTS devices and training business, the North Sea Range and BAE SYSTEMS interests in the naval training business Flagship Training Limited.

Another key responsibility will be BAE SYSTEMS' bid for the UK Military Flying Training System (MFTS), worth some (pound)13bn.

Operational Services

Neil Masom has been confirmed in charge of Operational Services. Neil's primary responsibility is to provide common streamlined support processes for BAE SYSTEMS' in-service military equipment. His business is focused on three areas: e-business and information services, supply chain management and manpower services.

International Programmes

Peter Wilson remains in charge the Al Yamamah programme in Saudi Arabia and a number of other BAE SYSTEMS international interests. International Programmes' 35 years of experience in the Kingdom is seen as a key differentiator in its bids for major prime contracts, both overseas and UK Private Finance Initiative requirements, including FSTA and MFTS.

Land & Sea

Ian Booth is confirmed in post to provide naval new-build and in-service support solutions. The company's globally recognized naval consultancy business and its program to reactivate ex-Royal Navy Upholder class submarines sit within this business. Ian is also responsible for land services bid activity.

Customer Solutions & Support Australia

Harry Bradford's business provides a focus for BAE SYSTEMS' wide-ranging civil and military support and integration activities in the region. He is also responsible for CS&S's three flying training schools, two in Australia and one at Jerez, Spain.

About BAE SYSTEMS:

BAE SYSTEMS is the truly global systems, defense and aerospace company.

BAE SYSTEMS employs more than 100,000 people around the world and has annual sales of some $18 billion. The company offers an unrivalled global capability in air, sea, land and space with a world-class prime contracting ability supported by a range of key skills.

BAE SYSTEMS designs and manufactures civil and military aircraft, surface ships, submarines, space systems, radar, avionics, communications, electronics, guided weapon systems and a range of other defense products. BAE SYSTEMS, through its Avionics Subsidiary and North American divisions, is also a member of the Boeing JSF team.

www.baesystems.com