Chicago ? Boeing Co.’s commercial aircraft division continues to struggle from the economic downturn resulting from last year’s terrorist attacks but its military aircraft unit is performing well, chairman Phil Condit said Monday.

Speaking to shareholders at Boeing’s annual meeting, Condit said Boeing should complete negotiations this summer with the U.S. Air Force for the lease of about 100 767 tanker transports to replace the military’s aging fleet of airborne tankers. Condit said Boeing is close to getting congressional approval for a 60-plane C-17 contract that will last through 2008.

“It (military aircraft division) is well positioned to continue profitable growth and deliver significant value,” he said.

Demand for Boeing’s single aisle commercial aircraft is showing signs of improvement, according to Condit, but bids for the company’s 747 jumbo jet continue to lag.

Boeing delivered 110 airplanes in the first three months of this year, Condit said, down 12 from the same period a year ago but on pace to meet its lowered production target of 380 for 2002. That’s down from 527 last year.

While Boeing’s space and communications unit did well overall, its satellite systems program has met technical problems that have adversely affected earnings.

Among the technical problems: reflectors that become contaminated in space, reducing the amount of power the satellite needs for operation.

Weakness in the commercial satellite business also is being attributed to current economic conditions. The unit is reorganizing, streamlining and adopting manufacturing and quality control features that will improve its performance by the end of the year, Condit said.

Shares of Boeing were up $2.12, or 5.1 percent, to close at $43.63 in trading Monday on the New York Stock Exchange.