The government, however, has not settled on a firm position.

Defense Minister Giampaolo Di Paola said Italy intended to be part of the European consolidation process while Economy Minister Vittorio Grilli indicated it was a question for Finmeccanica.

Finmeccanica Chairman Giuseppe Orsi, under pressure as a result of a corruption probe, launched a tough restructuring and asset disposal programme last year to streamline the company, which posted a 2.3 billion-euro loss in 2011.

But while there has been some progress in reorganising its units, none of the planned sales have come off.

There are concerns that a failure to speed up the process could mean Finmeccanica, Europe’s third-biggest defense group, will not be considered a worthwhile partner in possible new consolidation talks among aerospace and defense companies.

“Finmeccanica must accelerate its restructuring to avoid becoming a victim of any sector consolidation. The risk is that it would have to bend to conditions set by others at the alliance table,” a European defense industry executive said. “Simply saying Finmeccanica has been left out makes no sense.”

The EADS-BAE move also raised fears Finmeccanica, Italy’s second-biggest industrial group after carmaker Fiat, could lose market share in Europe, as France, Britain and Germany would focus defense and aerospace spending to benefit the new champion.

Finmeccanica chief operating officer Alessandro Pansa said on Wednesday a EADS-BAE merger would trigger a “domino effect” even though not in the short term, although it was too early to assess the impact of such a move.

CROSSROADS