Boeing insists BAE-EADS merger is no 'fundamental threat' BAE is one of the top 10 contractors to the US military, which buys weapons including the Bradley fighting vehicle and the Paladin artillery system from the UK company. A deal between BAE and EADS, which also owns planemaker Airbus, would require the approval of the US government. Mr McNerney added that a tie-up between the two companies would create a business that "would look a little more like us." Unlike EADS and BAE, Boeing has major businesses supplying governments with weapons as well as selling commercial aircraft to airlines. Despite Mr McNerney's dismissal of the threat posed by the merger, it comes at a tricky time for Boeing. The Seattle-based company is cutting costs and jobs as the US shrinks its defence budget. Although cuts are due to start next year, the industry is dogged by uncertainty over which programmes will be cut or scaled back. November's election adds another layer of complication because Republican challenger Mitt Romney has pledged to maintain defence spending if he wins. BAE Systems' shares fell on Thursday on worries over the hurdles to the merger. The British defence group's shares, which spiked 10pc yesterday on news of the tie-up, fell as much as 7pc in early trading, while shares in EADS dropped 10pc at one stage. Investors are considering the political, regulatory and business implications of the merger and whether it could succeed. If successful, the two companies will have combined sales of £60bn, employ 220,000 people worldwide, be the main supplier of Europe's military efforts, build Britain's nuclear submarines and own Airbus, the world's biggest plane manufacturer. Fitch, the credit rating agency, said the deal "faced numerous and significant obstacles in the coming months, which may result in watering down of the deal and its desired benefits."