Fitch: European aerospace and defense companies unchanged

Fitch Ratings said that a preliminary assessment of the U.K. Strategic Defense and Security Review reveals that the planned spending cuts to the U.K. defense budget are not likely to have an effect on the ratings of any of the European aerospace and defense companies rated by the agency, which include BAE Systems (BBB+/stable/F2), Finmeccanica SpA (BBB+/stable/F2) and MTU Aero Engines AG (BBB-/stable/F3).

A significant reduction in defense expenditure is expected, including a cut in procurement and maintenance spending. Nevertheless, Fitch said the broad financial impact of these cuts on the major corporates in the sector is unlikely to be either material or rapid because of their limited reliance on the U.K. Ministry of Defense as a customer, their well-diversified product and service offerings and their current financial profiles, which provide, for the most part, ample headroom under current ratings.

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