Boeing, the world's biggest aircraft maker, has recorded its first loss for five years, battered by poor performance at its space unit.

The firm announced a net loss of $1.25bn - including a one-off charge related to recent acquisitions - for the first three months of 2001, a far worse figure than analysts had predicted.

Boeing's shares plunged by more than 7%, reinforcing an already gloomy day on Wall Street, where shares lost almost half their heavy Tuesday gains.

By 2000 GMT, the Dow Jones Industrial Average - of which Boeing forms a major component - was down 74.24 points at 10,227.08.

Investors were modestly cheered by the fact that Boeing's commercial planes division, the sector most vulnerable to the post-11 September effect, returned respectable results.

Satellite speculation

The roots of the weak result lie in Boeing's policy of diversifying away from the commercial jets business.

In recent years, it has spent billions of dollars on acquisitions, including $3.9bn for the satellite arm of Hughes Electronics.

But this satellite unit has performed poorly, hit by the global decline in telecoms activity and stagnant investment by cash-strapped operators.

Space division revenues for the quarter rose slightly to $2.3bn, but operating profit halved to a meagre $42m.

Boeing has admitted problems in the satellite division, and said it would cut "a couple of thousand" extra jobs.

Holding steady

In its main commercial division, the firm said it was on track with a previously-announced programme to cut 30,000 jobs and reduce output by half.

But it insisted that its commercial aeroplane unit would remain profitable, thanks to an aggressive cost-cutting drive.

Commercial jet sales were $8.3bn for the quarter, barely down on the $8.4bn earned a year earlier.

Boeing affirmed its revenue target for 2002 at $54bn, declining only slightly in 2003.