Qinetiq, the FTSE 250 defence contractor, has unveiled a £1.5bn extension to its partnership agreement with the º£½ÇÊÓƵ Ministry of Defence (MoD).
The Farnborough -based company announced on Thursday that it will prolong its Long Term Partnering Agreement (LTPA) with the government by an additional five years, extending it until 2033, as reported by .
The LTPA contract held by Qinetiq equips the º£½ÇÊÓƵ armed forces with testing and training capabilities to enhance safety during operations.
According to the firm, this extension will sustain over 1,200 highly skilled jobs at 16 locations throughout England, Scotland and Wales.
Defence Secretary John Healey MP stated: "Rigorously tested equipment and the trialling of emerging technologies are key to ensuring our armed forces are using combat-ready capabilities on the frontline."
"The contract will help keep Britain secure at home and strong abroad, as we drive forward innovation to bolster our national security and support skilled jobs across the º£½ÇÊÓƵ."
Shares in Qinetiq surged seven per cent on Thursday morning as investors sought to capitalise on the ongoing defence boom.
CEO Steve Wadey commented: "Through the LTPA, we play a vital role helping to protect and enhance the º£½ÇÊÓƵ's defence and security."
"The extension of our partnership with MoD enables us to continue investing to deliver the transformational change in test and evaluation that's required to ensure our armed forces have operational advantage over disruptive technologies."
President Donald Trump's decision to withdraw America from European defence initiatives has triggered a spike in military expenditure from the º£½ÇÊÓƵ and the European Union (EU).
The º£½ÇÊÓƵ is currently aiming to boost its defence spending to 2.5 per cent of GDP by April 2027.
Companies such as BAE Systems, Lockheed Martin and Airbus have all reaped benefits as global geopolitical tension escalates following Russia's incursion into Ukraine and ongoing conflict in the Middle East.
Questions over Qinetiq remain
Qinetiq, a firm specialising in cyber and analytics tools, experienced an unexpected sell-off in March due to persistent contract delays in its US operations.
Russ Mould, investment director at AJ Bell, commented on the situation: "The company's operations on both sides of the Atlantic both fell victim to delays resulting from the º£½ÇÊÓƵ's Strategic Defence Review and proposed spending cuts in the US by the Trump administration."
"However, today's update will have restored a bit of confidence in the technology-focused company. It has recognised a need to rejig operations so it is more aligned with current spending priorities and it has secured an extension to a key Ministry of Defence contract."
"That said, there is still a real sense Qinetiq is being left behind by its peers who have notably more positive outlooks. To avoid coming under pressure, longstanding CEO Steve Wadey will likely need this to change in future updates."
