BAE Systems has received a $138m contract from the US Navy to continue producing propulsors for the Virginia-class submarine programme.
The contract covers propulsor assemblies, engineering services, replacement parts and related support. Its ordering period runs through September 2032, according to the company.
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BAE said it is meeting the US Navy’s production target of two Virginia-class propulsor sets a year and has supplied major propulsor assemblies for every submarine in the class to date.
The company is using manufacturing and engineering facilities in Louisville, Kentucky; Jacksonville, Florida; and Minneapolis, Minnesota, to support production. It said investment at those sites is intended to help meet the US Navy’s stated 1+2 submarine manufacturing cadence.
BAE Systems Weapon Systems vice president Jason Casciotti said: “BAE Systems is delivering the complex components essential to U.S. undersea dominance. Our scaled facilities and skilled workforce are focused on strengthening the submarine force.
“By leveraging a proven track record of excellence for these critical components, we ensure the Navy has a reliable partner for propulsor manufacturing.”
BAE Systems updates 2026 performance
The contract was announced alongside a trading update in which BAE reported “strong operational and financial performance” so far in 2026.
In the year to date, the company has secured £33bn ($44bn) of orders. Second-half awards include about £4.3bn of further funding for the UK’s Dreadnought-class nuclear deterrent submarine programme and around £1.6bn of orders related to the Global Combat Air Programme.
The company said trading in its Electronic Systems, Air and Platforms & Services businesses had offset subdued growth and margins in Maritime, where it is progressing the first-in-class stage of the Type 26 frigate programme.
BAE Systems chief executive Charles Woodburn said: “We’ve delivered strong financial and operational performance year to date, as well as positive order intake momentum.
“Our substantial backlog provides good visibility and, with our portfolio aligned to evolving threats and customer priorities, we remain well positioned to deliver sustainable growth over the years ahead.”
Looking ahead, BAE Systems has raised its expected 2026 free cash flow to about £3bn from more than £2bn.
The company maintained its guidance for sales growth of 8% to 10%, underlying earnings before interest and taxes (EBIT) growth of 10% to 12% and underlying earnings-per-share growth of 11% to 13% at constant exchange rates.
The guidance is based on 2025 figures of £30.7bn in sales, £3.3bn in underlying EBIT and 75.2p in underlying EPS.
