Northrop-Grumman has given up a lengthy effort to win a huge contract to build the next generation of aerial refueling tankers for the U.S. Air Force.
The contract covers nearly 200 planes and is worth tens of billions of dollars over the next two decades.
Northrop had teamed up with Europe-based Airbus to compete for the contract against U.S.-based Boeing, which has been supplying tankers to the U.S. Air Force for decades.
Northrop officials said the Pentagon unfairly favored Boeing, but U.S. officials insist the competition was fair. Boeing officials say they are offering a plane that is cheaper to operate and will survive longer in combat than its competition.
This hard-fought contest has been underway for years and included fierce legal wrangling and a contracting scandal that saw a Boeing manager and a top Air Force official go to jail.
Members of Congress have also been squabbling over the contract because the Boeing version of the plane would be built in Washington State, while work on the Northrop-Airbus plane would have brought many jobs to Alabama.
The contract is for new planes for the complex task of refueling military planes in mid-air. In-flight refueling greatly extends the range of fighters, bombers, and transports, giving some of them the ability to reach targets anywhere in the world.
The job is now performed by the Boeing KC-135, which is based on the 707 airliner, a plane that has been declared obsolete by airlines and retired from commercial service.
In other aircraft industry news, the parent company of Airbus, EADS, says it lost about $1.4 billion in the last few months of 2009, a period that saw a profit in the prior year.
EADS is wrestling with delays and problems in the programs that produce the world's largest commercial plane, the A380, as well as development problems with a new military transport called the A400M.
The A380 is now in commercial service, but the economic downturn has slowed orders. EADS says it has now gotten the A400M program back on track.