DEFENCE giant BAE Systems has signed a contract with the Ministry of Defence which could pave the way towards future deals.

The Long Term Partnership Agreement Foundation Contract has been signed at Warton, near Preston, which is the first step towards a long-term deal covering support and upgrade of the MoD's aircraft fleet.

Work done at Samlesbury under the company's Military Air Solutions Business is said to be central to this long-term agreement for "fixed wing" aircraft.

The announcement will provide a framework for detailed negotiations between BAE Systems and the government in the future.

Lord Drayson, Minister for Defence Procurement, said: "This contract is a significant step forward towards agreeing a Long Term Partnering Agreement with BAE Systems in the fixed- wing sector so that it can more efficiently meet the needs of the Armed Forces in the future.

"We will now be working hard with the company to negotiate a robust agreement that makes commercial sense to both sides by the end of the year."

Mike Turner, chief executive of BAE Systems, said: "With goodwill and continuing commitment from both sides, this contract should lead to the ultimate goal of a binding agreement between us that will provide effective through-life support to the RAF's fixed-wing fleet for front-line service.

"For our part, we fully understand the need to further transform our air sector business so that we can deliver on this".