DUBAI (Reuters) - A Boeing 747-400 cargo plane operated by United Parcel Service Inc crashed shortly after takeoff into a military compound near Dubai's airport on Friday, killing two crew members, authorities said.

U.S. parcel delivery company UPS confirmed the crash of the plane, which was en route to Cologne, Germany.

"I saw the plane suddenly dive down into the base and heard a huge explosion," said a nearby resident.

A government source familiar with the initial crash report said the plane had taken off from Dubai International Airport at 6:40 p.m. (1440 GMT) and was diverted to a military compound after reporting trouble.

The aircraft caught fire, hit a covered parking lot, then bounced and crashed, the source said, adding that there were no injuries on the ground. Smoke was billowing from the base, a Reuters witness reported.

The United Arab Emirates civil aviation authority said the bodies of the two crew members were recovered.

Saif al-Suwaidi, general manager of civil aviation, told Dubai TV that flights had not been affected at Dubai's airport, the busiest in the Middle East.

"The pilot reported fire and smoke in the cockpit and was instructed to return to Dubai. After failing to land at the airport, the plane disappeared from radar screens and was found later (at the crash site)," Suwaidi said.

Boeing said on its website it would send a team to provide technical support to the investigation upon invitation from the authorities.

GE Aviation spokesman Rick Kennedy said plane was running GE CF6-80C2 engines. GE Aviation, a unit of General Electric Co said it is sending investigators to the scene.

"It is unusual to lose an aircraft on take-off, particularly once airborne. Crashes in this phase of flight are not common. Without more information it is difficult to speculate what happened," said Paul Hayes, director of air safety at UK-based aviation consultancy Ascend.

Both UPS and the Boeing 747-400 have relatively good safety records, he added.

Initially, Al Arabiya television had reported the plane had hit a busy highway, but later reports indicated it did not hit the road.