Airbus parent EADS has ruled out making a solo bid for a lucrative U.S. tanker contract after its partner pulled out and said production problems on its A380 superjumbo would hit core profit this year.

The Franco-German group also axed its dividend when posting a big loss for 2009, including a previously announced charge of 1.8 billion euros ($2.4 billion) for its share of last week's bailout for the A400M military transporter.

The tanker setback and the specter of persistent cost problems on the A380 as airlines order customized features for the world's largest passenger plane pulled EADS shares down 4.5 percent to 15.19 euros by 1321 GMT, making it one of Europe's top blue-chip losers.

EADS predicted stable revenue and a 2010 operating profit of around 1 billion euros, but some analysts called the forecast over-cautious in the light of an upbeat delivery outlook, fuelling concerns about lingering inefficiencies or high costs.

EADS was confident enough in a nascent aviation recovery, however, to plan an increase in single-aisle Airbus A320 production to 36 a month from December from 34.

On Monday, EADS's U.S. partner Northrop Grumman dropped out of the race to build a U.S. military tanker, leaving U.S. rival Boeing as the sole bidder.

EADS chief executive Louis Gallois told reporters Northrop's withdrawal meant: We have no chance to win in the competition in these conditions.

Airbus Chief Executive Tom Enders also played down 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 e-mail.

European Union trade commissioner Karel De Gucht said it was highly regrettable that a major potential supplier would feel unable to bid for a contract of this type.

CLEAR ADVANTAGE

The German government's coordinator for aerospace matters, Peter Hintze, told Reuters the U.S. should rethink its competition to supply aerial refueling aircraft, while German economy minister Rainer Bruederle said the U.S. government had given a clear advantage to Boeing.

EADS, the world's second-largest aerospace group after Boeing, posted a 2009 net loss of 763 million euros and an operating loss of 322 million, a far cry from net profit of 1.57 billion and an operating surplus of 2.8 billion in 2008.

The A380 continued to weigh heavily on the underlying performance, EADS said, adding it had also suffered exceptional foreign exchange effects which hit 2009 earnings before interest and tax by 2.5 billion euros compared with 2008.

EADS excludes some exceptional items and goodwill from its standard reporting of operating income, but has recently used another yardstick, stripping out other one-off items such as the A400M to allow investors to gauge its underlying business.

Such operating earnings before one-offs generated a 2.2 billion euro profit in 2009, beating a company forecast of 2 billion. Weakness in commercial aerospace was offset by strength in satellites and defense.

Gallois said he was confident of exporting hundreds of A400Ms in coming years in competition with airlifters from Lockheed Martin and Boeing . Exports will generate royalties to be used to refund part of the bailout money.

EADS officials said the company and engine suppliers had filed counter-balancing legal suits over the delays.

In a surprise move, EADS announced the planned increase in output of its most popular family of single-aisle planes, the A320. However, it said it had used up some of the buffers or margin for delay in development of its future mid-sized A350.

I feel we can now turn our attention to growth again, Gallois said. Boeing, whose 2009 profit beat forecasts, said last month it saw improved demand for jetliners.

But DZ Bank analyst Markus Turnwald said: The (EADS) outlook for 2010 is very disappointing due to deteriorating hedge rates and further A380 problems.

Gallois said it had not been an easy decision to cancel a dividend but predicted a payout would return on 2010 profit.

(Writing by Dan Lalor; Editing by James Regan and David Holmes)

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