Job losses will be spread across BAE sites at Samlesbury, Brough, Chadderton, Farnborough and Warton.
The Brough and Warton sites will be the hardest hit, with an estimated 510 jobs set to be lost at the two sites.
The defence company said the cuts were necessary following changes in the defence programme announced in December.
Kevin Taylor, managing director of BAE’s Military Air Solutions (MAS) division, said: “We have today initiated consultation regarding potential job losses across the Military Air Solutions business, affecting the Brough, Chadderton, Farnborough, Samlesbury and Warton sites.
“Potential job losses are in manufacturing, engineering and associated support functions.
“These potential job losses result from the impact of the changes in the defence programme announced in December 2009, together with other workload changes.
“It is vital that MAS remains competitive by ensuring we have the correct balance of skills, capabilities and resources as we await the outcome.
“Today’s announcement is designed to ensure we remain properly positioned in what will undoubtedly become an increasingly challenging environment.”
With further cuts in defence spending expected following the strategic defence review, the Confederation of Shipbuilding and Engineering Unions warned of “worrying prospects” for the defence industry.
CSEU general secretary Hugh Scullion said: “The unions are shocked at the scale of these losses and will be demanding an explanation from BAE.
“Talks will begin locally in the first instance to attempt to mitigate the planned losses and if necessary national negotiations will follow. The unions will oppose any compulsory redundancies.”
“With the forthcoming defence review these cuts may be the tip of the iceberg, but knee-jerk reactions from employers could make things even worse.
“Cuts are being demanded before the shape of the defence industry has been decided. The defence industry will suffer more than necessary, if employers make poor judgment calls.”