European aerospace groups Airbus (AIR.PA) and Thales (TCFP.PA) are exploring a tie-up of at least part of their space activities, two industry sources said, confirming a report by French business paper La Tribune.
The sources said the preliminary talks were focusing on the groups' satellite activities. Both companies declined to comment.
"They are thinking about this seriously," one of the sources said, asking not to be identified.
Shares in both companies rose fractionally in early trading.
Facing fierce competition, European space companies are under pressure to streamline a field marked by high expenditure and a strong dependence on government contracts.
La Tribune, citing unnamed sources, said the two groups have launched "low-key discussions that are exploratory in nature".
Airbus Defence & Space and Thales Alenia Space, in which Italy's Leonardo (LDOF.MI) holds a minority stake, are Europe's largest makers of satellites for telecommunications, navigation and surveillance.
The discussions emerged weeks after Airbus took a 900 million euro ($980.37 million) charge for its struggling satellite services business, on top of 500 million euros last year.
Airbus CEO Guillaume Faury last month told analysts that the company was "evaluating all strategic options" for its space business including restructuring, co-operation, a portfolio review and potential merger and acquisition options.
($1 = 0.9180 euros)
