Boeing Co. whose stock has fallen 16 per cent since May, on August 28 approved a plan to buy back up to $3 billion of its own shares, equal to about five per cent of its publicly traded stock.

The move comes amid a general downturn in aerospace and defence stocks, which have slid dramatically in the past few months after a three-year run-up during the Iraq war and a boom in plane orders.

The Chicago-based plane maker, which is also the Pentagon's No. 2 supplier, said the repurchased shares would be used for general corporate purposes, including stock options.

"We are enhancing shareholder value with a balanced use of our cash flow," said Boeing Chief Executive Jim McNerney. "Our record backlog, strong operating performance and solid balance sheet allow us to invest in growth programmes like the 787 Dreamliner while also pursuing a significant share-repurchase programmes."

Boeing has been performing well financially for the past year or so, despite recording a second-quarter loss last month after some large one-time charges.

In 2005 Boeing reported $2.6 billion in profit as it booked a record 1,002 net commercial plane orders and its defence unit reported its highest ever revenue on the back of strong US defense spending.

But this year analysts are predicting a slowing of growth in the US defence budget and saying the commercial airplane boom has already hit its peak.

Boeing's shares hit an all-time high of $89.58 on May 10, but since then have fallen more than 16 per cent. The shares closed up about one per cent at $74.72 on the New York Stock Exchange on August 28.

Boeing's shares helped drive the Standard & Poor's Aerospace and Defence index to more than double between March 2003, when US-led forces invaded Iraq, and May of this year. The index has fallen about seven per cent since then.

Boeing added that it had terminated its existing share buyback plan, which it said was largely complete. That plan, launched in 2005, authorised the repurchase of 40 million shares.

The company said it has spent about $5 billion buying back its stock since 2004.