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Friday, June 16, 2006 - Page updated at 12:00 AM


Airbus parent launching probe into A380 debacle

The Associated Press

PARIS — Airbus parent company EADS will launch an investigation into the latest delays of the superjumbo A380, its co-chairman said in an interview published Thursday amid mounting questions about the company's management and stock sales earlier this year.

Arnaud Lagardère, co-chairman of European Aeronautic Defence & Space, said he had no knowledge of the production problems with the A380 — the world's biggest passenger plane — until Airbus made an announcement Tuesday, the newspaper Le Monde reported.

A spokesman for DaimlerChrysler — EADS' biggest shareholder, with a 30 percent stake — said it wasn't told about the production delays either, Bloomberg News reported.

Lagardère said EADS would launch an inquiry to determine what caused the delays and how much Airbus co-Chief Executive Gustav Humbert and EADS co-Chief Executive Noël Forgeard knew about the problems.

Speculation is rife the debacle could cost them their jobs. Forgeard, who launched the A380 project as head of Airbus in 2000, on Wednesday deflected suggestions the setback could lead to his ouster.

The mounting clamor to discover who knew what and when suggests serious fractures within the management of EADS, a showcase European project led by French and German management.

EADS spokesman Michael Hauger said Airbus had informed EADS management and customers in mid-April about possible delays with the A380, but at that point the extent of the delays could not be determined.

Big airplane, growing delays

A380 orders: 16 customers had ordered 159 planes as of May. Singapore Airlines is scheduled to receive the first one late this year.

Five top buyers of passenger version: Air France, 10; Emirates, 43; Lufthansa, 15; Qantas Airways, 12; Singapore Airlines, 10.

Unhappy airlines: After news of the latest delays, Singapore Airlines, Emirates and Qantas said they will seek compensation. Malaysia Airlines said it was reviewing terms of its deal for six of the planes.

Sources: Associated Press, Airbus

The news comes amid revelations Forgeard, his family and other top EADS managers sold off stock before Airbus announced the delays, which sent the shares tumbling and angered airlines.

Shares in EADS plunged more than 25 percent Wednesday after the delay and a profit warning, shaving millions of dollars off the company's value. Stock prices rallied Thursday, closing at 20.00 euros ($25.16), up 6.8 percent.

Shares are well below their price of mid-March, when Forgeard and others sold off large amounts, according to filings with France's stock-market regulator AMF.

Forgeard exercised 2.5 million euros ($3.1 million) worth of options at 32.01 euros ($40.21), and three of his children each sold 1.4 million euros ($1.75 million) worth of shares in the same period, at 32.82 euros ($41.23), according to the regulator.

EADS board members François Auque and Jean-Paul Gut also sold shares.

Lagardère's company, Lagardère SA, also sold half of its 15 percent stake in EADS this year, but the EADS co-chairman insisted he had no idea of the A380's troubles until now.

"We had no information," he was quoted in Le Monde as saying. "If we had been dishonest, we would not have sold 7.5 percent, but all of our shares."

EADS said Forgeard's sales came before he knew about the A380's production delays and that all the transactions by management fully meet the company's compliance rules.

Board members have only three weeks each quarter in which they can trade their shares, EADS said.

A representative declined to comment further and would not say whether the sales were on a predetermined schedule.

"All of this seriously hurts the image of this European jewel" and "sharpens the teeth of Boeing," the daily Libération wrote Thursday. "And it gives a bit of grist for the mill ... for the bards of Euroskepticism."

The production delays raised questions about the A380's future, as rival Boeing is staking its bets on the smaller 787.

Airlines worldwide demanded compensation from Airbus and reconsidered their A380 orders. Crucial customer Singapore Airlines dealt a blow to Airbus with a deal Wednesday for 20 Boeing 787-9 aircraft worth $4.52 billion.

Airbus had hoped Singapore would buy the A350, a planned competitor to the 787 that has been plagued with problems.

Copyright © 2006 The Seattle Times Company




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