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 U.S. tanker contract after partner Northrop Grumman dropped out of the race, leaving U.S. planemaker Boeing as the only bidder.
The tanker setback and the specter of continued difficulty containing costs on its A380 superjumbo, as airlines order customized features, left EADS shares 4.9 percent lower at 0920 GMT on Tuesday.
Its earnings included a previously announced charge of 1.8 billion euros ($2.4 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.
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 in a statement, adding it had also suffered exceptional foreign exchange effects.
Total currency effects hit 2009 earnings before interest and tax by 2.5 billion euros compared to 2008, it said.
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 company forecasts of 2 billion. Weakness in commercial aerospace was offset by strength in defense including higher Eurofighter export deliveries.
Analysts polled by Reuters before the A400M deal was finalized had expected a 2009 operating profit before one-offs of 694 million euros and a net loss of 43 million.
In a surprise move, EADS said Airbus would restore output of its most popular A320 family of single-aisle planes to 36 from 34 a month in December.
However, it said it had used up some of the buffers in development of its future mid-sized A350.
I feel we can now turn our attention to growth again, Gallois told analysts.
U.S. rival Boeing, whose 2009 profit beat forecasts, said last month it was seeing improved demand for jetliners.
(Editing by James Regan and Dan Lalor)
($1 = 0.7350 euro)