European aerospace giants EADS and BAE Systems are driving to redraw the global battlefield for the booming aircraft market, with a tie-up boosting EADS in the US and creating a defence and civil aircraft behemoth.

EADS controls airliner maker Airbus and has interests in defence and space industries.

BAE Systems is focused more in the defence sector and in the US where both face daily market battles with Boeing and future competition from industries in emerging countries.

EADS was worth 23.15 billion euros ($29.87 billion) and BAE Systems 11.81 billion pounds ($19.02 billion) before their shares fell sharply in response to merger/takeover talks. That amounted to joint capitalization of $48.84 billion.

The announcement that they want to marry will have to cross major obstacles, including anxieties on potential job losses in France which is already agonizing over huge cuts at auto giant PSA Peugeot and in Spain, where unemployment is the highest in the European Union.

The giants' businesses in the sensitive defence industry and ownership structures - Britain's stake in BAE and French-German shares in EADS - could further complicate negotiations.

"It has been problematic for EADS with the French and the German governments so I fail to see how the addition of another government would reduce the complexity," said Guy Anderson, senior analyst at IHS Jane's Defence Industry.

Downgrading its rating for EADS stocks, Citigroup pointed out that "achieving merger synergies for the combined entity could be difficult, particularly given the need to ringfence certain strategically sensitive activities."

The European Aerospace Defense and Space Company emerged from a restructuring and merger of French, German and Spanish aerospace firms in 2000.

The deeper origins of its key business Airbus lay in a complex government structure that took into account French and German national interests, a factor that caused difficulties for British shareholders who once held minority stakes in Airbus through BAE.

BAE sold its 20 percent in Airbus in 2006, citing its ambitions to concentrate on transatlantic strategy as a reason, in contrast to the European manufacturing focus of Airbus.

AFP