updated 4/7/2006 7:46:42 AM ET 2006-04-07T11:46:42

BAE Systems PLC confirmed Friday that it is negotiating with European Aeronautic Defence & Space Co. about selling its 20 percent stake in Airbus.

"We believe that now is the right time for us to divest our Airbus shareholding to allow us to concentrate on our core trans-Atlantic defense and aerospace strategy," BAE Chief Executive Mike Turner said in a statement.

EADS, which holds 80 percent of Airbus, recently valued BAE's Airbus stake at 3.5 billion euros ($4.3 billion).

BAE has long been expected to sell the Airbus holding as it focuses on building its presence in the giant U.S. defense market through acquisitions. EADS has made no secret of the fact that it is eager to take full ownership of Airbus.

"EADS has always wanted Airbus," said analyst Edmund Shing at Kepler Equities, though he said the price is high.

BAE shares were down 1.6 percent at 424 pence ($7.43) in trading on the London Stock Exchange. EADS shares were up 0.6 percent at 32.36 euros ($39.71)

Airbus has eclipsed U.S.-based Boeing as the world's top-selling commercial aircraft manufacturer, delivering more planes than Boeing for the third straight year in 2005.

Around 13,000 workers are employed by BAE Systems building wings for Airbus, mainly at Broughton in north Wales and Bristol, southwest England.

Ian Waddle, national officer of the Amicus union, said it was concerned about potential job losses.

"We want to find out if production will remain in the U.K. or whether it will be shifted to countries where the new buyers are based," Waddle said.

"We want to ask the company what the commitment will be to the U.K. if it no longer has a say in the Airbus project," Waddle added.

Copyright 2006 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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