Italy says Finmeccanica can seize on EADS-BAE collapse

Finmeccanica must act quickly to seize opportunities arising from the collapse of the merger between defense groups BAE Systems and EADS , Italy's defense minister said on Thursday.

Europe's two biggest aerospace groups will go back to the drawing board to find new strategies after Germany stymied the creation of the world's biggest arms and aviation company.

Italy's Finmeccanica, meanwhile, has been presented with various opportunities to take advantage of the merger's failure, Giampaolo Di Paola told reporters at the margins of a parliamentary hearing.

The defense minister said that these have to be evaluated first by management and then by the government, adding: "I would like to see these evaluations carried out very rapidly."

Di Paola's comments, which came ahead of a meeting between Finmeccanica and the government to discuss possible alliance prospects, boosted shares in the state-owned conglomerate to their highest level in seven months.

An industry source familiar with the situation said that Finmeccanica, Europe's third-biggest defense group, could take part in any cross-border talks for possible alliances in aeronautics, defense electronics and helicopters.

The company, which posted a 2.3 billion euro ($2.97 billion)loss last year, would have greater bargaining power in sector consolidation talks if it manages to make progress in its continuing restructuring and asset disposal plan, the source added.

Chairman Giuseppe Orsi and other Finmeccanica executives are expected to meet Prime Minister Mario Monti, Di Paola and Treasury Minister Vittorio Grilli on October 16 to talk about the prospect of alliances and development in the aeronautics and defense sectors.

Finmeccanica, Italy's No. 2 industrial group behind car maker Fiat , has put on the block its non-core energy and transportation assets and has promised to earn 1 billion euros from disposals by the end of the year to avoid its credit rating being cut to "junk".

The industry source said that Finmeccanica's experience in building the Eurofighter could make it easier for the group to join any European or international partnership for the next generation of fighter aircraft, which could either be a drone or a more traditional fighter plane.

Although its Anglo-Italian AgustaWestland helicopter business is profit-making, Finmeccanica needs to cut costs and restructure its aeronautics and defense electronics operations - sectors in which greater international cooperation is needed because of shrinking budgets.

Analysts have said that Finmeccanica could expand cooperation or even consider a merger with French aerospace and defense electronics specialist Thales .

Finmeccanica shares were up 1.1 percent at 1040 GMT (0640 EDT).

(Additional reporting by Danilo Masoni; Editing by David Goodman)