BRITISH Aerospace has increased its profits to £358 million - £9 million up on last year.

And the company is looking forward to a rosy future thanks to the imminent merger with GEC Marconi, which will create the world's second-largest defence defence company with a presence in nine countries.

BAe has an order book worth at least £27.9 billion and defence sales are already increasing this year, with the recent sale of Gripen and Hawk aircraft to South Africa.

Sales growth in Airbus, the wings of which are assembled at Samlesbury, is anticipated to continue with rising production deliveries but the company spent more than anticipated, as it did with certain defence contracts, notably Nimrod and Eurofighter Typhoon.

A major investment programme is now under way for the production of 620 Eurofighter aircraft for the project's four partner nations, securing thousands of jobs at the Warton and Samlesbury sites.

But BAe is also involved in future military aircraft programme activity, including partnering Lockheed Martin for the US-led Joint Strike Fighter (JSF) and concept definitions for a Future Offensive Air System (FOAS) programme to enter service in the UK from 2018.

BAe chairman Sir Richard Evans said: "We see performance of the business continuing to strengthen into the second half and, with our confidence in the outlook, the net interim dividend per share has increased.

"In addition to pursuing maximum value from current business operations, significant progress is being made in the strategic development of the company."

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