BAE Systems PLC (A/Negative/A-1) reported a 2001 net loss of £128 million after tax, compared with a loss of £19 million in 2000. Furthermore, the Farnborough, U.K.-based company stated that performance in 2002 would be hurt by airline industry weakness affecting aircraft manufacturer Airbus SAS (in which BAE holds a 20% stake) and by completion of some defense export construction contracts. Standard&Poor's incorporated expectations for subpar 2001 financial measures into the rating, with significant profit improvement anticipated for 2002. BAE management's indication of dimmed 2002 prospects highlights Standard&Poor's negative rating outlook, "... failure to achieve meaningful profit improvement, or deterioration of the balance sheet due to debt-financed acquisitions, could cause ratings to be lowered."
