BAE Puts Woodburn On Radar As Next Chief Exec

An oil industry veteran will next week be handed a leading role at BAE Systems (LSE: BA.L - news) , placing him in pole position to take the helm of Britain's biggest defence group.

Sky News has learnt that Charles Woodburn, the boss of oilfield services company Expro International, is to become BAE's chief operating officer.

An announcement will be made to the London Stock Exchange next week, and could come as soon as Monday.

Mr Woodburn's appointment will be widely interpreted in the City as placing him in line to succeed Ian King, who has run the manufacturer of Challenger (Hamburg: 4SE.HM - news) tanks and Eurofighter Typhoons since 2008.

The search for a potential successor to Mr King has been led by Sir Roger Carr, BAE's chairman, and has taken several months.

City sources said the recruitment of Mr Woodburn should be viewed "in the context of BAE's succession planning" but cautioned that the board had not yet made a definitive decision that he would eventually replace Mr King.

The current chief executive is unlikely to retire until at least 2017, one analyst said.

At 45 years old, Mr Woodburn would represent something of a generational shift as BAE's next chief executive.

Having worked for 15 years for Schlumberger (LSE: 0CT7.L - news) , the world's biggest oilfield services company, and more recently at Expro, Mr Woodburn has acquired extensive experience of large and complex engineering projects.

One person who has worked with Mr Woodburn described him this weekend as "world-class" at managing major contracts.

Nevertheless, the recruitment of an executive with no previous defence sector experience may be viewed as a relative gamble by shareholders on the part of the BAE board.

His arrival well ahead of any possible appointment to the top job at BAE - the world's fifth-largest defence company - would assist with the necessary transition, one investor said.

BAE is by far Britain's biggest defence company, and is playing a major role in the development of the new fleet of submarines that will carry the UK's Trident (BSE: TRIDENT.BO - news) nuclear warheads.

The company has been through a painful transition under Mr King, shedding thousands of jobs amid previous cuts in some areas of defence spending in the UK and US, BAE's two most important markets.

It also abandoned a proposed merger with the European defence and aerospace group EADS in 2012, following opposition from Angela Merkel, the German Chancellor.

The collapse of the deal prompted recriminations from a number of City institutions which questioned BAE's leadership.

However, the company has since been buoyed by the UK Government's pledge last year to meet a NATO commitment to spend at least ‎2% of national GDP on defence.

Labour said last year that the Chancellor would have to rely on "creative accounting" by including intelligence spending in the total in order ‎to fulfil his promise.‎

Michael Fallon, the Defence Secretary, is likely to have been informed of BAE's plans to appoint Mr Woodburn, analysts said.

Under the company's articles of association, BAE's chairman and chief executive must be British citizens, owing to the sensitive nature of its work.

Previous discussions between the company and Downing Street about whether those obligations could be relaxed have never led to an agreement about how to do so.

BAE's national security clearances‎ mean that its American subsidiary must be run by a US national, with the same principle applying to its UK-domiciled parent.‎

The company is a top-10 supplier to the Pentagon, and is expected to benefit from a further rebound in US defence spending.

Last year, Mr Fallon warned defence companies‎ not to "pad profit margins through fat government contracts".

"There will be no let-up in our demand for full value for every tax pound spent," he said.

One of the challenges facing both Mr King and whoever succeeds him will be accelerating BAE's presence in the fast-growing cyber-defence arena.

Next Thursday, BAE will announce annual results for 2015, with analysts forecasting sales of £17.5bn and pre-tax profits of £1.68bn.

At Friday's closing share price of 467.1p, BAE had a market capitalisation of just under £14.8bn.

BAE declined to comment on Saturday (Shenzhen: 002291.SZ - news) .