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BAE Systems announced last night that it has agreed to sell its 20 per cent stake in plane maker Airbus for €2.75 million (£1.9 million).

Europe's largest defence firm said it planned to recommend the proposed disposal to shareholders in the "best interests" of the company and its investors.

If shareholders agree to the sale, Airbus' majority-owner, the European Aeronautic Defence and Space Company (EADS) will take control of the business outright.

BAE Systems first announced in April that it was considering selling its stake in Airbus, which was subsequently hit by fresh delays relating to the delivery of its new A380 super jumbo planes.

The announcement in June that the €12 billion project would again be delayed as a result of production and technical problems prompted a profit warning and management shake-up at EADS, which currently owns 80 per cent of Airbus.

After EADS failed to agree with BAE Systems on a price for the British-based company's remaining 20 per cent stake in Airbus, investment bank Rothschild was asked to set a bid price for the sale.

The audit of Airbus completed by Rothschild in July concluded that the stake was worth £1.9 billion, around half the amount BAE Systems was hoping to secure for its share in the business.

Announcing its decision to finally accept the price recommended by the audit, BAE Systems said in a statement: "Today the board of BAE Systems announces that it considers that the proposed disposal is in the best interests of the company and its shareholders as a whole."

"Having assessed the results of the audit, the board believes that Airbus is facing a challenging short to medium-term outlook, in particular with respect to certain of its principal programmes," BAE Systems added, explaining its decision to dispose of its Airbus stake.

BAE Systems hopes to net around €1.78 million (£1.2 million) from the sale and proposes to return up to £500 million to investors by re-buying their shares in the wake of the proposed disposal.

The company indicated that its board was also considering using proceeds from the sale to invest more cash in the group's pension schemes, with remaining money from the deal set to be spent on making debt repayments and future investments and acquisitions.