BAE Systems signs US Army deal for M777 gun structures

(This Jan. 4 story has been corrected to read 'were previously made', not 'are made', in paragraph 5)

LONDON (Reuters) - BAE Systems said it would restart the production of structures for its M777 lightweight howitzer after it signed an initial deal worth up to $50 million with the U.S. Army for the weapon, which has been donated to Ukraine.

The British defence company said it would work with its suppliers in the UK and the U.S. to produce the titanium structures, with the first deliveries planned in 2025.

It said it would start the deliveries while finalising the details of the contract and its total value.

BAE Systems said it had seen an increase in interest from across Europe, Asia and the Americas in the M777 gun system.

The structures were previously made in Barrow-in-Furness in Britain, with assembly and testing taking place in Hattiesburg, Mississippi.

BAE Systems said the new contract created the "optimum conditions" for a restart of M777 production in the UK. A spokesperson said the company could not say where production would take place.

Australia, Canada and the United States have donated the weapons to Ukraine, the company said.

"This restart of production of the major structures for the U.S. Army's M777s comes at a critical time, with howitzers deployed on operations in Ukraine," said John Borton, vice president and general manager of BAE Systems Weapons Systems UK.

BAE Systems said the contract would present an opportunity for new and existing users to join a new M777 production initiative and take advantage of the benefits of a hot production line and economies of scale.

(Reporting by Paul Sandle; editing by Kylie MacLellan and Barbara Lewis)