Airbus scraps dividend as losses mount over A380 turbulence

Paris: Airbus parent EADS fell to a heavy 2009 loss and axed its dividend as production niggles on its A380 superjumbo swelled provisions and dampened the outlook for this year, despite signs of an aviation recovery.

The Franco-German group also ruled out a solo bid for a lucrative US tanker contract after partner Northrop Grumman dropped out of the race, leaving US planemaker Boeing as the only bidder.

The tanker setback and the spectre of continued difficulty containing costs on its A380 superjumbo, as airlines order customised features, left EADS shares 4.9 per cent lower at 0920 GMT yesterday.

Its earnings included a previously announced charge of 1.8 billion euros (Dh8.8 billion) for its share of a European bailout for the A400M military transport, agreed last week, but EADS also took a 240-million knock from costs on the A380, the world's largest airliner.

And while EADS was confident enough in a nascent aviation recovery to plan an increase in single-aisle Airbus A320 production from December, it said the A380 would continue to weigh "substantially" on core earnings this year.

EADS said it expected roughly stable revenue and an operating profit of around 1 billion euros in 2010. Chief executive Louis Gallois told reporters Northrop's withdrawal from the tanker tender meant "We have no chance to win in the competition in these conditions."

Airbus chief executive Tom Enders also dampened talk of an independent European bid, barring a change in the situation.

"I leave the political assessment to others. For me it is clear, however, that under the current conditions a bid makes no economic sense for Airbus," he told Reuters by email. ‘The outlook for 2010 is very disappointing due to deteriorating [currency] hedge rates and further A380 problems," said DZ Bank analyst Markus Turnwald.

Tanker programme: Northrop withdraws

Northrop Grumman Corp won't bid for the US Air Force's $35 billion tanker programme, making good on its threat to withdraw from the contest unless the government altered some of its requirements.

Northrop and partner EADS, parent of Boeing rival Airbus SAS, based their tanker proposal on the Toulouse, France-based company's A330, while Boeing will use its smaller 767 as a platform for the refuelling plane. The selection methodology "clearly favours Boeing's smaller refuelling tanker," Northrop Chief Executive Officer Wes Bush said in a statement.

— Bloomberg