Babcock International Group, the engineering firm that operates the Rosyth and Faslane naval dockyards, said yesterday it hopes to obtain the green light for work on the long-awaited contract for new Royal Navy aircraft carriers in a few months.

Chief executive Peter Rogers told The Herald: "We hope to get the manufacturing work on the carrier contract by March."

The decision to build the carriers was announced by the government about four years ago but the final signing of the contracts was delayed.

Problems arose because BAE Systems and VT, the companies that will build the two 660,000-tonne ships, had not set up a legal entity to do the work.

Babcock's dockyard at Rosyth in Fife will assemble the two new carriers after they have been built elsewhere.

Rogers said Babcock's two naval dockyards in Scotland are "doing well" although work on submarines at Faslane is slowing down.

"Let me say that the Scottish operations are significant for the company," Rogers said. "They are more than holding their own."

Rogers was commenting on Babcock's performance north of the border after the company issued a trading update.

Babcock told the London Stock Exchange that its trading continues to meet City and company estimates.

The company, which supplies support services to UK armed forces and other firms, also said it is confident that its results for the year to March 2008 will meet its forecasts.

Babcock said its rail division, which operates under the name First Engineering, is expected to trade profitably during the second half of the year.

It said framework contracts within its rail and networks divisions continue to grow and that they are delivering a steady schedule of work.

The company added its current contracts are performing as expected and new contracts are starting as planned.

Rogers said the rail division had a bad first half, falling into a loss-making situation but should be back in the black in the second half of the financial year. "We rather shot ourselves in the foot," he stated.

Rogers said the rail operation has a significant presence in Scotland with contracts worth more than £40m.

In the trading update, Babcock said growth prospects in South Africa remain excellent as the level of support required by Eskom - the national energy company - continues to increase significantly.

Babcock announced last week that it has bagged a deal to provide long-term support services for British Energy's fleet of seven AGR power stations.

Babcock's subsidiary ALSTEC will provide British Energy with specialist fuel route and reactor protection system engineering services to support the extension of the operating lives of the power stations.

It will also supply, operate and maintain specialist reactor graphite core inspection and sampling equipment to support the programme of statutory reactor inspection outages.

Babcock believes the work, scheduled to start in April this year and run through to 2012, will be worth more than £70m.

British Energy has options to extend the contract through the operating lives of the AGR power stations, which could extend beyond 2020.

Babcock's generally positive trading statement found favour with the City and traders marked up its shares by 8p, or 1.5%, to 531p.