CEO of Airbus Parent Says Stock Sales 'Unfortunate Coincidence'
{{#rendered}} {{/rendered}}The embattled co-chief executive of Airbus parent EADS on Friday defended his sale of shares in the company before news of delays to Airbus' A380 superjumbo sent the stock tumbling, even as France's market regulator confirmed that it would look into the transactions.
European Aeronautics Defence & Space Co.'s French co-CEO, Noel Forgeard, described as an "unfortunate coincidence" the stock sales in March on which he earned 2.5 million euros ($3.1 million) in profits.
He also sought to play down the importance of the costly production backlog affecting the world's largest passenger plane, and said none of the 16 airlines that have placed orders for a total of 159 A380 planes have canceled.
{{#rendered}} {{/rendered}}"It's a glitch," Forgeard said on Europe-1 radio. "All aircraft programs have suffered delays."
Wiring problems with the much-touted double-decker A380 announced this week incensed airlines worldwide and ballooned into a debacle that prompted questions about the leadership of EADS, a European showcase project run by French-German management.
One key question surrounds large stock sales by Forgeard, three of his children and other top EADS managers in mid-March -- three months before the A380 delays were announced.
{{#rendered}} {{/rendered}}French stock market regulator AMF said in a brief statement that it has been conducting a probe of EADS transactions for the past several weeks. "The recent events will be examined in the framework of this probe," it said. It said it will study Forgeard's sale.
Germany's securities regulator BaFin, meanwhile, said Friday that it would investigate the sharp drop in EADS stock this week as part of a routine study of unusual market movements.
Forgeard, for his part, said: "We were not aware, not the shareholders, not the directors" of the A380's problems in March. He said the troubles surfaced in April, and that in late May they still seemed surmountable.
{{#rendered}} {{/rendered}}Workers on the A380 said they suspected production delays already in March, a union representative said. "Employees have known it for three months. We were not surprised by the delay," said Xavier Petrachi, CGT union representative for Airbus workers at the manufacturer's headquarters in Toulouse.
Speaking in a telephone interview, he said assembly lines were reorganized in March to change much of the aircraft's electrical systems after customer Singapore Airlines demanded modifications, from video screens to softened lights.
On Tuesday came the announcement of the delays. EADS stock plummeted 26 percent Wednesday after the news and a subsequent profit warning. The stock price rallied slightly Thursday but were down again Friday, falling 0.5 percent to close at 19.90 euros in Paris.
{{#rendered}} {{/rendered}}The shares remained well below prices in March, when Forgeard sold stock options at 32.01 euros, and three of his children each sold 1.4 million euros worth of shares at 32.82 euros, according to EADS public filings. Six other managers also sold shares in March, EADS said Friday.
"I have nothing to hide," Forgeard said on Europe-1, noting that he exercised only half his stock options in the deal, and that it was announced publicly. "If I had had the slightest privileged information, I would not have sold the shares."
President Jacques Chirac insisted Friday that he had "full confidence" in the increasingly troubled EADS management and was not worried about the A380.
{{#rendered}} {{/rendered}}"One must not exaggerate" the delays, he said. "Airbus is a grand project, a very big European success."
The A380's production problems raised questions about the plane's future, as rival Boeing Co. is staking its bets on a smaller, more fuel-efficient jet.
While no one has canceled the A380, some airlines are asking for compensation or reconsidering their orders. And in a major blow to Airbus, Singapore Airlines, the first customer for the A380, struck a deal Wednesday with Boeing (BA) for 20 787-9 Dreamliner planes.
{{#rendered}} {{/rendered}}Air France-KLM's vice chairman said Friday the airline is seeking talks with Airbus to see whether its 10 A380s will be further delayed. Air France had already agreed to a delay of about a year to summer 2008 for the start of deliveries.
Leo van Wijk -- who is also chief executive of KLM -- told Dow Jones Newswires that he remained confident in the long-term viability of the plane.