The US defence giant Lockheed Martin has posted a huge loss for the last three months of 2001, but said its earnings for the coming year would be better than expected.

The firm - which makes fighter aircraft and missile systems - reported a net loss of $1.51bn (�1.08bn) from October to December. This compares with a loss of $519m during the same three months the year before.

The main reason for the loss were the costs of Lockheed pulling out of the telecommunications business.

Stripping out this charge - which analysts had anticipated - the firm's results were slightly better than expected.

In early trade on Wall Street, Lockheed's shares climbed $1.19 to $50.60.

Strong sales

Operating profits were boosted by a 28% rise in sales at its aeronautics division.

This was helped by the sale of 10 C130-Js transport aircraft, and higher production of its F-22 fighter aircraft.

The division is expected to benefit in the future from the production of the F-35 Joint Strike Fighter (JSF).

The contract to develop the JSF aircraft - the biggest military equipment contract in history - was won last year by Lockheed, beating a rival bid from Boeing.

The contract could be worth more than $200bn, as the US Government wants up to 3,000 JSFs over the next 40 years to replace nearly all of its fighter jets currently in use.

Exit charges

The big loss recorded by Lockheed during the last quarter of 2001 had been expected.

In December the firm had said it would be pulling out of the telecoms business, and sell stakes in satellite network operators such as Intelsat and Inmarsat.

For the coming year the company said it expected earnings per share of its ongoing operations to be between $2.45 to $2.50 - well above the expectations of Wall Street analysts.