BAE Works With U.K., Partners to Supply Saudi Despite German Ban

(Bloomberg) -- BAE Systems Plc said it is working with industry partners and the U.K. government to keep supplying Saudi Arabia with support equipment on key contracts, after the German government restricted exports to the Persian Gulf kingdom.

In a statement Thursday ahead of its annual meeting, Europe’s biggest defense firm left its guidance for 2019 unchanged, while saying results remain “subject to geopolitical uncertainties.” Operating cash flow is expected to be significantly weighted toward the second half.

BAE shares were down 0.5 percent as of 8:31 a.m. in London. In February, the stock fell the the most since the Brexit referendum after the company said the German limits threatened its ability to do business in Saudi Arabia. German lawmakers imposed a ban on weapons exports to the Mideast state after the murder of Saudi journalist Jamal Khashoggi last year, and those restrictions were extended for an extra six months in March.

BAE counts Germany as a partner on the Eurofighter jet for which it’s chasing a big Saudi order after already providing 72 of the planes. Airbus’s German arm has a 30 percent workshare on the plane, while Munich-based MTU Aero Engines AG helps make the aircraft’s Eurojet powerplant.

BAE also supplies Saudi Arabia with Hawk jet trainers, and the German ban affects its ability to provide parts for those planes, as well as the Typhoon and older Tornado ground-attack jets.

U.K. Foreign Secretary Jeremy Hunt has written to his German counterpart warning that the curbs threaten Europe’s ability to fulfill its North Atlantic Treaty Organization commitments, Der Spiegel magazine has reported.

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