Chief executive Ian King has also made it clear that he would be happy to revive the deal if national governments were willing to let it proceed.
King has issued an open letter, jointly signed by chairman Dick Olver, stating they do not regret pursuing the merger, as it would have allowed the combined firm to “compete on equal terms with the biggest US prime contractors”.
The UK government is reining in defence spending so BAE will instead concentrate its efforts abroad, pushing sales of the Eurofighter Typhoon in Asia. The firm is also targeting a deal to supply the US with Hawk trainer aircraft.
Meanwhile the Sunday Times yesterday said that BAE might use the proceeds of a £7bn Eurofighter contract with Saudi Arabia to fund a share buy-back programme and appease irate investors.