London, April 6, 2026, 15:22 (BST)
BAE Systems secured a $180 million contract from Sweden on April 2 for its TRIDON Mk2 air-defence system, part of an 8.7 billion crown package that underlines how European governments are still spending heavily on protection against drones and other aerial threats. Saab was also included in the order.
The deal matters because European governments are still shifting money into air-defence and counter-drone systems, equipment used to detect and disable unmanned aircraft, after lessons from the war in Ukraine. Sweden says military spending will reach 2.8% of gross domestic product in 2026 and 3.5% by 2030, adding to a demand cycle that BAE said in February had already pushed its order backlog, or booked work yet to be delivered, to a record 83.6 billion pounds. 1
TRIDON Mk2 is a truck-mounted 40 mm anti-aircraft gun built to hit drones, cruise missiles and aircraft, and it can also be used against ground targets. Lena Gillström, president of BAE Systems Bofors, said the system was designed for “today’s warfare”. 2
That Sweden order lands on a stronger base than BAE had a year ago. The company reported a 12% rise in full-year operating profit in February and forecast 2026 sales growth of 7% to 9% and operating profit growth of 9% to 11%, while Chief Executive Charles Woodburn said higher military spending should support growth for years. 3
Recent contracts back that up. On March 25, the Pentagon said BAE and Lockheed Martin would quadruple production of seekers, the guidance units that help missiles find targets, for the THAAD interceptor. On April 2, the GCAP Agency placed a £686 million contract with Edgewing, the tri-national venture set up to lead design and development of the next-generation fighter project involving Britain, Italy and Japan. 4
The Sweden package also shows how competitive the European market is becoming. Saab said its share of the April 2 order was 2.6 billion crowns, while Leonardo, another major regional player, is working with BAE in GCAP and in support work tied to Turkey’s Typhoon purchase.
But investors are no longer paying up blindly for every defence headline. Reuters reported last week that long production cycles and capacity limits can slow the conversion of new orders into earnings, while valuations in the broader sector have already climbed sharply; the U.S. aerospace and defence index was trading at about 32 times forward earnings, according to LSEG data. DWS’s David Bianco said “a lot of conflict premium” was already in valuations, while Bernstein analyst Douglas Harned said investors should not assume the current conflict alone will lift estimates further.
For BAE, the near-term question is execution rather than demand. Sweden’s deliveries are due in 2027 and 2028, and the company is already guiding for 7% to 9% sales growth this year as European governments continue to fund air-defence and fighter-jet programmes, from Sweden’s latest package to Turkey’s Typhoon support deal. 1
