European efforts to match US and Israeli technology in unmanned spyplanes suffered a major setback when the Europe's only prototype of a pilotless jet crashed.
European aerospace group EADS said it was investigating why the test model code-named Barracuda plunged into the sea off Spain on Saturday as it was trying to land at the San Javier Air Force base during its second test flight.
A spokesman for the firm said it was reconsidering the future of the project but later said EADS remained committed to the German-backed project despite the crash.
The Barracuda had behaved normally during taxi, takeoff and flight before diving into the sea before landing.
The aircraft's loss is the second embarrassing blow for EADS in a week, after its Airbus civil planemaker unit was forced to acknowledge further delays to its troubled A380 superjumbo.
It is also the second time EADS has faced headwinds in developing an unmanned aerial vehicle (UAV) after problems with funding its EuroMALE long-range spy drone.
Officially the Barracuda is a "technology demonstrator" built purely to conduct trials. But it is widely seen as a strategically important test of Europe's ability to compete with the United States in building unmanned fighter jets of the future, vying for sales potentially worth billions of dollars.
Israel shares the lead with the United States in drone technology, according to defence industry experts.
Initially designed for surveillance and reconnaissance with first deployment as early as 2009, the Barracuda's designers have left open the option of developing it into a weapons platform able to strike directly behind enemy lines.