Mar., /BRUSSELS, Belgium -- Boeing Co. is considering acquiring BAE Systems Plc, Europe's largest defense company and part-owner of Airbus SAS, Boeing chief executive Phil Condit said Friday.

"We are open to mergers and acquisitions," Condit said at a news conference. "A whole lot is being written about BAE. It could be a possibility -- we're looking at it."

The chief executive added, however, that there is "nothing in the offing shortly."

Boeing's military revenue is growing while commercial sales are falling, and the Chicago-based company is looking to expand in Europe.

The market value of BAE, the Pentagon's biggest European contractor, has fallen by two-thirds in the past year to near an eight-year low of $5.7 billion amid cost overruns on submarine and plane contracts.

"Boeing wants to bulk up its defense business," said Alan Beaney, who helps manage 650 million pounds in assets at Principal Investment Management and owns BAE stock. "There are a lot of things that complicate a deal, such as the special share and BAE's stake in Airbus."

Boeing, which made its name supplying Boeing 737 and 747 jets to airlines, now makes the F/A-18 fighter jet and C-17 cargo plane. A combination with BAE, known for its Nimrod maritime-patrol plane and Astute submarine, would create a company with annual sales of about $73 billion and 238,700 employees, Bloomberg data shows.

At least one analyst ridiculed the potential deal.

"We would be talking about putting together two awkward, giant companies and expecting them to become gazelles," said Rich Turgeon of Victory Capital Management, a unit of KeyCorp that sold most of its 3.53 million Boeing shares last quarter. "That will just never happen. They'll become even more clumsy than they already are."

Condit was in Brussels to announce the appointment of Dutch diplomat Joris Vos to head the company's relations with NATO and the European Union.

Condit said Boeing will continue to develop its "long relationship with BAE" regardless of any possible merger. He said the company was "looking at a lot of opportunities" as the company seeks to expands its global presence.

Vos, a former ambassador to the United States and self- proclaimed "Atlanticist and European," has previously been the Dutch foreign minister's adviser on the Middle East, Yugoslavia, Bosnia and NATO enlargement.

BAE spokesman Phil Soucy said reports of an "imminent" Boeing- BAE combination were speculative.

"Nothing has changed," he said. "We've said for the past six years that the world will contain two or three major players at the top end of the aerospace industry, with each having a U.S. component, and we intend to be part of one of them."

BAE holds a 20 percent stake in Airbus, the No. 2 maker of airliners, which might prove an obstacle to a takeover. London- based BAE makes wings and other components for Airbus, which is 80 percent owned by European Aeronautic, Defense & Space Co.

"We have no plans to sell our Airbus stake," BAE Chairman Sir Richard Evans said Feb. 20. "It is a very good business."

Sales from BAE's commercial aerospace division, which mainly comprises the company's interest in Airbus, last year fell 9.7 percent to 2.8 billion pounds from 3.1 billion pounds.

"BAE has been a very good shareholder for us since the beginning," Airbus CEO Noel Forgeard said Tuesday in a speech to the Royal Aeronautical Society in London. "The relationship could not be better."

BAE and Boeing are collaborating on U.S. defense programs for drones and a new tactical radio system. The companies are also part of a group bidding to supply airborne-refueling tankers to Britain's military.

"I think a deal between the two is going to happen, but not in the next year or so because of share valuations and politics," said Charles Armitage, a Merrill Lynch analyst with a "buy" rating on BAE stock.

The British government holds a special share in BAE, allowing it to block a transaction. Current U.K. rules also prohibit a foreign company from holding more than 15 percent of BAE stock.

Without referring directly to any possible bid for BAE, Condit said Boeing is a "significant cash generator" and future bids could be funded through cash or a mix of cash and stock.

Condit also held meetings with European Commissioners, including Competition Commissioner Mario Monti, who could veto any nondefense deals Boeing did in Europe.

In addition, Condit met with EU Trade Commissioner Pascal Lamy, who is guiding Europe's defense of Airbus subsidies and attacks on Boeing's military subsidies.