BAE Systems has raised its free cash flow guidance for 2026 to around £3 billion, up from more than £2 billion, after a strong year of order intake that has now reached £33 billion.

The FTSE 100 defence, aerospace and security group issued the market update on Thursday 12 November, its second upgrade to its 2026 outlook this year after it lifted sales, profit and cash flow targets at its half-year results in July.

Chief executive Charles Woodburn said order intake momentum remained positive and that the group's substantial backlog gave it good visibility over growth in the coming years, as governments continue to raise military spending amid elevated geopolitical tensions.

Orders reach £33 billion in 2026

BAE said it had secured £33 billion of orders so far in 2026, up from more than £27 billion at the same stage a year earlier, with further agreements expected before the end of the year.

Notable awards in the second half included about £1.6 billion of orders related to the Global Combat Air Programme, the British, Italian and Japanese project to build a next-generation fighter jet. That includes BAE's share of a £4.6 billion contract awarded to Edgewing to complete the advanced concept and assessment phase and move towards detailed design.

The group also secured about £1.5 billion from its share of MBDA orders, and £4.3 billion of funding for Britain's next-generation nuclear deterrent submarines.

Cash flow upgrade driven by customer advances

The free cash flow upgrade reflects some benefit from customer advances received to date, BAE said, and excludes any material advances it may receive in the remainder of the year. Free cash flow in 2025 was £2.2 billion.

The company left its other guidance unchanged from July. It still expects sales growth of 8% to 10% on 2025 sales of £30.7 billion, underlying earnings before interest and tax (EBIT) growth of 10% to 12% on 2025's £3.3 billion, and underlying earnings per share growth of 11% to 13% on 2025's 75.2p.

Guidance is stated on a constant currency basis using a sterling-dollar rate of $1.32 to £1. BAE said a five-cent move in the exchange rate affects sales by around £500 million, underlying EBIT by around £70 million and underlying earnings per share by around 1.4p.

Returns to shareholders reach £1.6 billion

Total cash returned to shareholders in 2026 is expected to reach around £1.6 billion, comprising the 2025 final dividend, the 2026 interim dividend of 15.0p payable on 2 December, and approximately £500 million of share repurchases.

The update caps a strong week for UK defence stocks. Fellow London-listed defence names Chemring and QinetiQ also reported encouraging updates this week, with Chemring announcing a record order book and QinetiQ reporting higher half-year profit.

BAE will announce its preliminary results for the year ending 31 December 2026 on 19 February 2027. Sources: BAE Systems market update, 12 November 2026 and Morningstar / Dow Jones, 12 November 2026.