DORSET'S Cobham is helping to design countermeasures to protect airliners from attack by terrorists armed with shoulder-launch missiles.

The Wimborne-based world-class aerospace group is designing anti-missile pods that could eventually be fitted to every airliner across the world.

Cobham is working with Honeywell, BAe and American Airlines as part of the research project to help defend airliners from missile attack.

"Although it's a smallish $45 million study contract, the potential is huge," said Cobham chairman Gordon Page.

"US homeland security spending will be $35 billion this year and $41 billion next year, " he added.

Soaring orders are underpinning growth at Cobham as US military spending increases and the world's civil aviation market recovers.

Each of Cobham's divisions saw significant new orders, increased revenue and higher operating profit over the six months to June 30, the group reported yesterday.

"It is anticipated that, in line with prior years, second half trading will be stronger than first half, and Cobham will continue its strong growth profile in 2004," said Mr Page.

"Encouragingly, there are indications that the commercial aerospace market is showing tentative growth."

Cobham has enjoyed considerable success in providing fuel systems for Boeing's 7E7 Dreamliner airliners.

But Cobham has reduced its shareholding in BASCO, its non-core aircraft services joint venture with Singapore Technologies at Bournemouth Airport from 40 per cent to 19 per cent: "We now treat this as a trade investment."

Group margins were broadly one percentage point lower than in 2003 due to the £1.3 million (2003: £0.4 million) costs associated with Cobham's investment in aircraft programmes including the Future Strategic Tanker Aircraft (FSTA).

Cobham is part of the AirTanker consortium named as preferred bidder to supply between 15 and 20 Airbus-based long-range tankers to replace the RAF's ageing VC10s and Tristars.

The £13 billion FSTA deal - Britain's largest PFI contract - has been hit by uncertainties but Cobham expects a "programme milestone" by the end of this year and hopes to close the deal by the end of 2005.