Defence contractor BAE Systems has reported record financial results for 2025 as strike action continues at its Lancashire sites over pay.
One of Britain’s largest unions, Unite, described the company’s £2.6bn annual profit as “obscene” and warned that industrial action would continue unless workers receive an improved pay offer.
BAE, Europe’s biggest defence contractor, announced a sharp rise in sales and a record order backlog on Wednesday, as governments worldwide increase defence spending amid heightened geopolitical tensions. The company said it has made a fair offer to staff, who it said already receive “market-leading pay and rewards,” and added that it remains engaged in discussions with unions.
Record financial performance
BAE said sales for 2025 rose by 10% to a record £30.7bn. Profit before tax increased to £2.6bn, up from £2.3bn the previous year. Shares in the company rose by 3% following the announcement.
Chief executive Charles Woodburn highlighted the company’s record order backlog, pointing to growing defence budgets as countries respond to escalating security challenges.
Union response and pay dispute
Unite, which represents around 5,000 workers at BAE’s factories in Warton and Samlesbury, said employees “know their value and want their fair share of the pie”.
The union said higher-skilled staff at the sites were given pay rises of 3.6% last year “against their will,” while factory floor workers accepted a 4.2% increase and an additional day off.
Local Unite organiser Ross Quinn said the striking workers, who earn average salaries of around £50,000, are “crucial” to BAE’s success.
Unite general secretary Sharon Graham 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 workers a 3.7% pay rise for 2026. Striking staff are demanding a 5.2% increase to compensate for last year’s below-inflation pay awards.
Company stance on strikes
A BAE Systems spokesperson said the current offer “is fair and ensures that our employees continue to receive market-leading pay and rewards, while balancing our need to be competitive and affordable for our customers”.
On the possibility of strike action continuing into March, the company said:
“With the majority of our employees working as normal, we are focused on minimising any disruption and implementing our robust contingency plans.”
BAE lost a High Court bid in November aimed at preventing employees from walking out at its Lancashire factories. The latest walkout began on 2 February, with more than 1,200 Unite members expected to strike until at least 20 February. Unite said its targeted action has removed key personnel from the production process.
Outlook and defence spending
Speaking after the results announcement, Woodburn, who has led the company 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.”
BAE said it expects profits to grow by around 10% in 2026.
Market analyst Richard Hunter of Interactive Investor said:
“BAE is basking in the increasing heat of geopolitical tensions with a set of results which have comfortably blown past estimates.”
The UK, along with other NATO allies, has increased defence spending. Prime Minister Keir Starmer pledged last year to raise defence spending to 2.5% of gross domestic product by April 2027. The BBC has reported this could rise further to 3% by the end of the current parliamentary term.
