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The decision by BAE Systems PLC to sell its 20% stake in Airbus means the British defense giant will now be freer to pursue its strategy of expanding in the U.S. But investors will want to see BAE match the returns it achieved from Airbus -- which contributed around 20% of the United Kingdom company's profit.

For Airbus and 80%-owner European Aeronautic Defence & Space Co., which confirmed it had entered talks with BAE to buy out its stake, a deal would simplify management. But it would also potentially stretch financial resources at a time of intense competition with U.S. rival Boeing Co. Analysts estimate the stake could cost EADS between $5 billion and $6 billion.

A BAE spokeswoman said talks with EADS have just started, adding the company wouldn't need specific approval from the U.K. government to sell the stake. It is unclear how long negotiations will take, or if they will result in a deal. Under terms of a 2000 agreement, BAE has a "put" option on its stake, and EADS has the right of first refusal, but the sale price isn't set.

BAE appears to have decided to cash out at a high point for the cyclical commercial-aviation business. "We believe that now is the right time for us to divest our Airbus shareholding to allow us to concentrate on our core trans-Atlantic defense and aerospace strategy," BAE Chief Executive Mike Turner said in a statement.

By exiting from Airbus, BAE also may avoid getting pulled into a bitter U.S.-European trade dispute between Boeing and Airbus over subsidies. The fight, which promises to be the most complex and expensive case ever brought before the World Trade Organization, is now heating up as WTO proceedings begin.

With nationalist sentiments running high in Congress following the recent move by Dubai World Ports of the United Arab Emirates to take over management of several U.S. seaports, BAE could face questions about its role in the sensitive U.S. defense sector. By dissociating itself from the hot-button issue of European subsidies to Airbus, BAE may defuse one potential hitch to a U.S. expansion.

BAE is the largest non-U.S. supplier to the Defense Department and a major player in the world's largest defense market, particularly after its purchase of armored-vehicle producer United Defense Industries last year.

U.S. defense-industry analysts say potential BAE acquisition targets could include Computer Sciences Corp., which confirmed Tuesday that it is for sale and has a big government information-technology-services arm.