EADS, BAE discuss merger

European Aeronautic, Defense and Space, the parent of Airbus SAS, is in negotiations with BAE Systems about a merger.

The talks are at an advanced stage and the companies are exploring a transaction allowing London-based BAE to maintain its independence to sell into the US defence market, said one source, who asked not to be identified because the talks are private. A final deal has not been reached, and an accord may still fall through, the people said.

A combination of BAE and EADS would echo plans for a single European aerospace business abandoned more than a decade ago when the formation of the two companies split the industry along civil and defence lines. A merger would create a counterweight to US aerospace companies including Boeing, Airbus’s main rival in civil aviation.