Airbus has reportedly withdrawn from a Japanese air-to-air refuelling tanker aircraft contract that is estimated to be worth more than a billion dollars.

According to the company, its defence division terminated plans to bid for the deal after the terms of the tender favoured Boeing, Reuters reported.

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Japanese Ministry of Defence recently issued a request for proposals (RFP) for the contract. The country said it is planning to acquire four tankers to support its existing four Boeing 767-based tankers.

"Airbus Defence and Space regrets the way in which this RFP has been formulated has forced it to conclude that it would be an inappropriate use of shareholders’ funds and company resources to bid on this contract."

Airbus argued that the RFP offers Japan a platform to purchase the aircraft through the US government’s foreign military sale programme and this does not allow a fair price comparison between its A330 multi role tanker transport aircraft (MRTT) and similar aircraft from other companies.

A statement from Airbus cited by Reuters read as: "Airbus Defence and Space regrets that the way in which this RFP has been formulated has forced it to conclude that it would be an inappropriate use of shareholders’ funds and company resources to bid on this contract and accordingly the company will not be competing."

A military variant of the civilian Airbus A330-200 airliner, the A330 is designed to perform air-to-air refuelling without any additional fuel tanks, as well as cargo, troop transport and medical evacuation missions.

In June, Airbus secured a $1.33bn contract from the Republic of Korea to supply its A330 MRTT aircraft. Korea selected Airbus tanker after competitively evaluating bids from Boeing and Israel Aerospace Industries.

Powered by Rolls-Royce Trent 700 engines, A330 can be fitted with the aerial refuelling boom system (ARBS) to refuel receptacle-equipped aircraft, Cobham 905E under-wing refuelling pods for probe-equipped aircraft, and a Cobham 805E fuselage refuelling unit (FRU) for large probe-equipped aircraft.