LONDON, March 17, 2026, 16:55 GMT
BAE Systems shares edged 0.4% higher to about 2,331 pence on Tuesday, after trading as high as roughly 2,346 pence, as the British defence contractor disclosed fresh U.S. Air Force work and stayed near record levels. The stock held firm even as Reuters reported a pullback in European defence shares more broadly. 1
The resilience matters because BAE’s shares had already more than trebled since Russia’s 2022 invasion of Ukraine when the company reported results last month. At that update, it posted a record 83.6 billion-pound backlog — work already booked but not yet delivered — and forecast 2026 sales growth of 7% to 9%, with operating profit up 9% to 11%. 2
Tuesday’s contract adds to that visibility. BAE said Robins Air Force Base had awarded it work to support and sustain the AN/ALQ-221 Advanced Defensive System on the U-2 reconnaissance aircraft, including repairs and software updates for electronic warfare — equipment used to detect, jam or evade hostile radars and missiles. Tim Angulas, BAE’s U-2 product area director, said the system was part of the company’s “long legacy in electronic warfare.” 3
The wider demand picture is still supportive. Honeywell Aerospace Chief Executive Jim Currier said on Tuesday he did not see defence demand “waning at all” and said heightened geopolitical tensions were fueling investment across the sector. 4
Peers show, though, that investors are no longer buying every defence name the same way. Leonardo jumped about 9% to a record on March 12 after lifting targets and sharpening its digital-defence push, while Rheinmetall fell nearly 8% the same day after a softer cash-flow outlook disappointed the market. 5
That is the risk for BAE at these levels. Honeywell also warned on Tuesday that shipping disruption into the Middle East could push some first-quarter revenue later into the year, and Van Lanschot Kempen strategist Joost van Leenders said “volatility in rate expectations can last” if oil spikes again, underlining how war can lift defence budgets while also complicating industrial delivery and rate bets. 6
Rheinmetall’s stumble offered another reminder of the mood in the sector. JPM analysts said investors were “wholly focused on execution” and on whether defence groups can turn swelling order books into cash and margin on schedule, a test that matters more once stocks are sitting near highs. 7
For now, BAE still has momentum and contract flow on its side. Chief Executive Charles Woodburn said in February the company was positioned for a “new era of defence spending” after 2025 operating profit rose 12%, and Tuesday’s contract helped keep that theme alive in a market that is still rewarding visibility, but looks less forgiving than it did a few weeks ago. 2
