Well-established market position as a leading aerospace and defense contractor. Active across key and diverse military programs in the U.K., the U.S., and Saudi Arabia. Reliance on government defense spending and the outcome of government procurement decisions. Inherent project execution risks and price competition well managed, as shown by low volatility in EBITDA margin. Positive free operating cash flow (FOCF) generation, mainly used for sizable payments to shareholders. Substantial accounting pension deficit, which results in weak S&P Global Ratings-adjusted leverage ratios for the rating category. Strong liquidity. The stable outlook on U.K.-based global aerospace and defense company BAE Systems PLC (BAE) reflects S&P Global Ratings' forecast of improving leverage metrics, namely 3.0x debt to EBITDA and 25% funds from operations
