Two Top Executives Out at Airbus Parent EADS

PARIS – A new French executive team starts work at Airbus parent group EADS on Monday after the European aerospace group forced out two top executives blamed for a two-week crisis over aircraft production blunders.

EADS co-chief executive Noel Forgeard quit on Sunday after losing a bitter struggle to keep his post at Europe's aerospace giant, and the man who had replaced him as the head of Airbus a year ago, Gustav Humbert, resigned in Forgeard's wake.

A showdown over who was to blame for A380 superjumbo delays that stripped a quarter off the EADS share price had threatened a Franco-German rift at a summit later on Monday.

After two weeks of negotiations among industrial shareholders Lagardere, the French media-to-aerospace group, and German car firm DaimlerChrysler (DCX), together with the French government that also owns a stake, EADS said SNCF railways boss Louis Gallois, 62, would replace Forgeard.

"Nobody, I say nobody, owns their job by right," French Finance Minister Thierry Breton told Europe 1 radio. He had lobbied behind the scenes for Forgeard's dismissal.

Gallois is a former head of French state company Aerospatiale, whose Toulouse factories are now part of EADS. He also ran aero engine maker Snecma, now part of Safran.

Gallois is already an EADS board member.

After a year running Airbus as Forgeard's hand-picked successor, Humbert will be replaced by Christian Streiff, former deputy CEO of French building materials group Saint-Gobain.

Humbert said the delays to the A380 had been a "major disappointment for our customers, our shareholders and our employees," adding that he felt it was the right course of action to offer his resignation to shareholders.

The A380 delays are set to cost EADS some 2 billion euros ($2.6 billion) in lost operating profits between 2007 and 2010. Its shares fell 26 percent, wiping out 5 billion euros of value, when the A380 delays were announced in mid-June, sparking a hunt by French AMF regulators to know exactly who knew what and when.

EADS shares closed at 22.46 euros on Friday. They have recouped half of the big plunge seen on June 14.

Some analysts have predicted the shares would rise further once the management crisis was resolved.

AIRBUS STAKE

EADS will continue to have two chairmen and two chief executives — a Frenchman and a German in each post.

Tom Enders, who remains the German co-CEO of EADS, will now assume responsibility for the Airbus shareholder committee.

Reporting to him will be the new Airbus chief Streiff, a bilingual French and German speaker chosen for a record of handling complex industrial processes at Saint-Gobain.

He was forced out of the building materials maker in May 2005 after falling out with CEO Jean-Louis Befa over strategy.

EADS said Airbus would be integrated more closely into the parent company.

The management shake-up is also aimed at restoring stability to Airbus as it prepares to relaunch the slow-selling A350, possibly renaming it the A370, before mid-July.

The market for the roughly 300-seat jet — estimated at thousands of planes rather than hundreds for the A380, according to industry analysts — is so far dominated by Boeing.

The changes occurred as EADS came a step closer to taking full control of its Airbus unit, of which it owns 80 percent.

BAE Systems said investment bank Rothschild had set a price of 2.75 billion euros ($3.50 billion) for a 20 percent stake, which it is selling back to EADS.

"Having received the determination of the price, the Board of BAE Systems will now consider its recommendation to shareholders regarding the proposed disposal," BAE said.

EADS plans to pay in cash.