Defence Giant BAE Hails Record Sales as Workers Remain on Strike

Why It Matters

The earnings surge confirms BAE’s dominance in a booming defence market, but the ongoing labour dispute introduces operational risk that could affect delivery timelines and investor confidence.

Key Takeaways

• BAE posted £30.7bn sales, up 10% YoY.
• Pre‑tax profit hit £2.6bn, 13% increase.
• Unite strikes over 5.2% pay demand continue.
• BAE offers 3.7% raise for 2026, rejects higher demand.
• Order backlog hits record amid rising global defence spending.

Pulse Analysis

BAE Systems reported a landmark financial year, with 2025 sales climbing to £30.7 billion, a ten‑percent rise over the prior period, and pre‑tax profit reaching £2.6 billion. The surge reflects a wave of defence orders as governments worldwide expand budgets to counter escalating security threats. A record order backlog, now the largest in the company's history, underscores the firm’s capacity to deliver both conventional platforms and emerging technologies such as autonomous systems and hypersonic weapons. Analysts attribute the outperformance to heightened geopolitical tension, which has accelerated procurement cycles across NATO allies.

Despite the strong top line, BAE faces mounting pressure from Unite, which represents roughly 5,000 workers at its Lancashire factories. The union has staged strikes demanding a 5.2 percent wage increase for 2026, arguing that the 3.7 percent offer falls short of inflation‑adjusted expectations. The walkouts, which began in early February, have removed key production staff and could disrupt delivery schedules if they extend beyond March. BAE maintains that its compensation packages remain market‑leading while emphasizing the need to keep contracts affordable for sovereign customers amid expanding defence spending commitments by the UK government.

For investors, the juxtaposition of record earnings and labour unrest creates a nuanced risk profile. While the company projects a further 10 percent profit growth in 2026, prolonged industrial action could erode margins and strain supplier relationships. BAE’s strategic positioning—leveraging a deep order backlog and diversified product portfolio—offers a buffer against short‑term disruptions, yet the firm must balance shareholder returns with sustainable workforce relations. Market watchers will monitor how quickly a settlement is reached and whether the UK’s pledge to raise defence spending to 2.5‑3 percent of GDP translates into additional contracts for BAE.

Defence giant BAE hails record sales as workers remain on strike

21 minutes ago · Josh Martin, Business reporter

Defence giant BAE Systems has hailed record results for 2025 while staff at its Lancashire sites continue striking over pay.

One of Britain’s biggest unions, Unite, has called the weapons maker’s £2.6 bn annual profit “obscene” and warned strikes would continue until a better pay offer is made.

BAE, Europe’s biggest defence contractor, unveiled a sharp rise in sales and a record order backlog on Wednesday as governments around the world boost their defence budgets.

The weapons maker said it has made a fair offer to staff, who currently receive “market‑leading pay and rewards”, and it is engaging with unions.

BAE on Wednesday hailed record results for 2025, which saw sales rise by a tenth to a record £30.7 bn.

Profit before tax at the defence giant was £2.6 bn, up from £2.3 bn a year earlier, with shares climbing by 3 % after the announcement.

Chief executive Charles Woodburn highlighted the firm’s record order backlog, as geopolitical uncertainty causes countries around the world to ramp up their defence spending.

Unite, which represents 5,000 workers at BAE’s factories in Warton and Samlesbury, said its workers “know their value and want their fair share of the pie”.

The union said higher‑skilled staff at the sites were last year given 3.6 % pay increases “against their will”, while those on the factory floor agreed to a 4.2 % rise and an extra day off.

Local Unite organiser Ross Quinn said the striking staff, on average earning salaries of £50,000, were “crucial” to BAE’s success.

And Sharon Graham, Unite’s general secretary, said: “BAE’s profits are little short of obscene. The company is making billions from government contracts and yet refuses to pay our members what they are worth.”

BAE has offered 3.7 % raises for 2026. Those on strike are demanding 5.2 % increases to account for last year’s below‑inflation raises.

A BAE Systems spokesperson said the current offer “is fair and ensures that our employees continued to receive market‑leading pay and rewards, while balancing our need to be competitive and affordable for our customers”.

On the prospect of strike action continuing into March, BAE said: “With the majority of our employees working as normal, we are focused on minimising any disruption and implementing our robust contingency plans.”

Speaking after the company’s record results, Woodburn, who has run BAE since 2017, said: “In a new era of defence spending, driven by escalating security challenges, we’re well‑positioned to provide both the advanced conventional systems and disruptive technologies needed to protect the nations we serve now and into the future.”

The firm is expecting profits to grow further, by around 10 % in 2026, it said.

Image: Ross Quinn / Supplied – a small group of protesters holding flags and placards pushing for a pay rise.

Unite said its targeted strike action removed key people from the production process.

The latest walkout began on 2 February, with more than 1,200 Unite members expected to strike until at least 20 February.

Richard Hunter, an analyst at Interactive Investor, said of the record year at the defence contractor: “BAE is basking in the increasing heat of geopolitical tensions with a set of results which have comfortably blown past estimates.”

The UK, like other NATO allies, has increased the amount it spends on weapons and defence contracts.

Prime Minister Sir Keir Starmer promised last year to spend 2.5 % of national economic output – measured as gross domestic product (GDP) – on core defence by April 2027.

The BBC this week reported that could increase further to 3 % by the end of this parliament.