"If there is a merger between British Aerospace and Dasa, the French government would have to take a new look at the (Airbus)...move towards an integrated company," a French transport ministry official said.

The official spoke ahead of a meeting of the transport ministers of Airbus partners France, Britain, Germany and Spain at the Farnborough airshow.

Currently, Airbus is a Groupement D'Interet Economique(GIE). It makes no profits or losses in its own right. Instead, they accrue to the four companies making up the Airbus consortium, France's Aerospatiale with a 37.9 per cent stake, Dasa, also with 37.9 per cent, British Aerospace with 20 per cent and Casa of Spain with 4.2 per cent.

France fears that any BAe-Dasa link would create an Anglo-German entity dwarfing France'sAerospatiale in the planned transformation of Airbus into a company. France appears fearful of being isolated commercially by Britain and Germany after the decision by the two latter countries' stock markets to merge their trading platforms, analysts said.

A Dasa company spokesman denied it was seeking a bi-lateral merger with British Aerospace and said the company was pursuing a "trilateral alliance" of the three main partners in Airbus.

The French transport ministry official said a British Aerospace/Dasa merger might lead France to abandon the transformation of Airbus.

"The objective is to stay in the framework of a balanced tripod as it is established today and not to evolve toward a structure in which one of the partners becomes dominant," the transport ministry official said.

"France is fairly favourable to the new Airbus company, it is favourable to the evolution towards a common civil and military pole," the official said.

"If one of the three partners became dominant, this would change therules of the game. The GIE structure is efficient. We want it to evolve but not at any cost -- otherwise you might as well stay as a GIE."

Airbus partners are in talks over transforming Airbus into a single integrated company that would own its own assets. The partners are also in talks to form a giant European aerospace and defence company, referred to as Euroco, capable of competing with the huge companies that have emerged in the US after the wave of aerospace mergers in the 1990s.

A senior French industry official said recently that "if BAe and Dasa announced a merger tomorrow, this would require us to re-examine the situation because it would mean they did not think we could build the European (aerospace and defence) company".

"If the final objective is not to merge our four companies into a European entity, we would have to see whether it's worth merging 50 per cent of our business into the Airbus company," the official said.