updated 7/11/2005 9:06:35 AM ET 2005-07-11T13:06:35

Siemens AG said Monday it has signed a contract with aircraft maker Airbus SAS to develop technology that would allow passengers to use their mobile phones during flights.

The German company will provide technology based on the GSM wireless standard for Airbus to integrate into the electronics systems used on its aircraft, Siemens said. The service is to be launched in 2006.

The companies plan to fit a base station, linked to the terrestrial GSM network via satellite, behind the ceiling panel of a plane.  The base station will receive signals from passengers' mobile phones, personal computers and organizers.

Siemens said the technology will allow passengers to use their electronic devices throughout a flight without interfering with the aircraft's own equipment.

Shares in Munich-based Siemens, which is selling its handset business to BenQ of Taiwan, were up 0.8 percent at $74.40 in afternoon trading in Frankfurt.

Stock in the European Aeronautic Defence & Space Co, Airbus' main parent company, was up 1.9 percent at $31.93 in Paris.

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