Airbus orders were stronger than expected, BAE said

Operating profits at BAE for 2005 were up 16% to �900m ($1.57bn).

Sales rose 17% to �15.4bn, also helped by the acquisition of US firm United Defense which BAE bought for �2.1bn in March last year.

BAE said orders for Airbus planes, the commercial plane maker in which it owns a 20% stake, had been "substantially ahead of plan".

However, overall profits for its commercial aerospace division fell to �179m from �201m a year earlier because of a weak market for its regional jets.

BAE shares closed down 26.25 pence, or 5.8%, at 421p.

Chairman Dick Olver said that the recent purchase in the US and a restructuring of its European interests had given BAE a "more balanced" structure.

BAE Systems was now "not overly dependent on any one sector but generating good returns for shareholders from a broad range of operations in the world's key defence and aerospace markets".

Pension scheme deficit

However, BAE Systems shares fell by 2% in morning trading, on news that the company's pensions deficit had increased.

It announced that its UK pension fund deficit had risen by nearly �800m, from �3.9bn in 2004 to �4.7bn last year.

It said it had finalised a plan to address the deficit of its main fund, which stands at �2.4bn.

It will cover 60% of the deficit by transferring cash and property to the scheme's assets, and will also increase its contributions.

The rest of the deficit will be covered by a series of benefit concessions from the scheme's members.