The future of a European project aimed at matching U.S. and Israeli prowess in unmanned spyplanes that could eventually fire weapons was thrown into doubt after a test model crashed off the coast of Spain.

European aerospace group EADS said it would decide on the future of the German-backed project code-named Barracuda once it knew why the prototype plunged into the sea on Saturday.

The sleek, pilotless plane crashed as it was trying to land at the San Javier Air Force base during its second test flight.

The fuselage and right wing have been recovered and EADS is working with Spanish and German authorities to work out why it failed, EADS spokesman Theodor Benien said on Monday.

After the results of the investigation we will decide whether and how we will continue with this specific program, the spokesman said.

The aircraft's loss is the second embarrassing blow for EADS in a week, after its civil planemaker unit Airbus was forced to acknowledge further delays in 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 without committing to production.

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 United States in drone technology, according to defense industry experts.

Initially designed for surveillance and reconnaissance with first deployment in 2009, the Barracuda's designers have left open the option of developing it into a weapons platform able to strike directly behind enemy lines.

EADS hopes to capture an initial 2 billion euro ($2.6 billion) share of the global UAV market, which Zoller has estimated to be worth 10 billion euros through 2010.

We have a broad portfolio of UAV activities and this is only one project. We will definitely continue our other activities, EADS spokesman Benien said.

The Barracuda behaved normally during taxi, takeoff and flight before diving into the sea before landing, Benien said. Its first test was in Spain in April.

(Additional reporting by Tim Hepher in Paris and Jason Neely in London)

Israel