Transaction in Own Shares

BAE SYSTEMS PLC
02 January 2007


BAE Systems plc: Transaction in own shares

BAE Systems plc announces today that it will continue its share buy-back
programme throughout its close period, which commenced on 31 December 2006 and
ends with the publication of the Company's preliminary results for the year
ended 31 December 2006, currently expected to be on 22 February 2007. The
programme will be executed by Hoare Govett Limited independently of, and
uninfluenced by, BAE Systems.

Any acquisitions will be effected within certain pre-set parameters, and in
accordance with both BAE Systems's general authority to repurchase shares and
Chapter 12 of the Listing Rules, which requires that purchases may only be made
if the price to be paid is not more than the higher of 5% above the average
market value of the Company's equity shares for the 5 business days prior to the
day the purchase is made.

BAE Systems plc announces that it has purchased the following number of its
ordinary shares of 2.5p each on the London Stock Exchange via Hoare Govett
Limited's affiliate, ABN AMRO Bank N.V., London Branch.

Ordinary shares:

Date of purchase: 2 January 2007

Number of ordinary shares purchased: 250,000

Highest price paid per share: 430.00p

Lowest price paid per share: 429.00p

Volume weighted average price paid per share: 429.81p

BAE Systems plc intends to hold the purchased shares in treasury.

Following the purchase of these shares, BAE Systems plc holds 28,925,000 of its
ordinary shares in treasury and has 3,216,768,371 ordinary shares in issue
(excluding treasury shares). This figure (3,216,768,371) represents the total
voting rights in the Company and may be used by shareholders as the denominator
for the calculations by which they can determine if they are required to notify
their interest in, or a change to their interest in the Company under the
Financial Services Authority's Disclosure and Transparency Rules.



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