The joint head of European Aeronautic Defence and Space (EADS) rejected on Friday suggestions he had indulged in insider trading knowing the group would announce delivery delays for the Airbus superjumbo which have slashed the value of the business.
“I had no privileged information,” said co-chief executive Noel Forgeard.
Responding to a storm of controversy over sales by him, his children and some senior company executives, Forgeard said that when he sold millions of euros’ worth of shares in EADS in mid-March he had not yet been told of the delays.
He said he found out only in April about delays in the production of the A380, the world’s biggest civilian airliner due to come in to service next year, which were made public on Tuesday.
He said he realised then that production problems posed a risk but was not certain until very recently that this would cause delays to deliveries.
“It’s a very complicated plane, given the scale of the project, there was a bottleneck, and an alarm bell that didn’t work at the right time,” he told French radio.
“It was very belatedly that the teams informed us that the line had become so long” that there would be delays, said the co-chief executive EADS, which owns Airbus.
The shock announcement about delivery delays, coupled with a profits warning, have provoked bitter remarks within EADS about breakdowns in internal communications and focused attention on the way the company kept customers and shareholders informed.
German-US auto giant DaimlerChrysler also said on Friday it had known nothing of the production delays of Airbus’ super-jumbo A380 when in April it sold a large package of shares in EADS which owns 80% of Airbus.
EADS suffered a loss valued at â,¬5,5-billion ($6,9-billion) on Wednesday, more than quarter of its market value, after informing clients that deliveries of the A380 would be delayed by six to seven months.
Its shares have since made a modest comeback, and in mid-mornng trade on Friday they were up 0,70% at â,¬19,86 on the Paris CAC 40 exchange.
The French financial markets regulator AMF said on Thursday that Forgeard, his three children, and several directors of the group had sold shares worth a total of several million euros in March after exercising stock options.
EADS said that there were no irregularities with the stock sales in March by Forgeard, his three children, and four other senior executives.
A French association for the protection of small shareholders has called on the stock market regulator to investigate these and other operations, and a deputy from the ruling UMP party has also pressed the AMF to launch a probe.
Forgeard also said on Friday that the problems stemmed from “certain factories” with “a fairly large concentration of problems in Hamburg”, Germany.
It appeared that the delays were due to problems with the plane’s control and alert systems, he said.
Forgeard said he wanted to stay in his job at the helm of EADS but that it was up to shareholders to decide. He said that despite the delays, Airbus would deliver a total of 450 planes next year.
The co-chairperson of EADS, Arnaud Lagardere, warned on Thursday that the group, now faced “a major crisis”.
Speaking of the production difficulties at Airbus, Lagardere said: “Surprising as it may seem, we [the directors] were not informed” and, commenting on the sale of a big stake in EADS by his company, said that he had not known of the scale of the problems at the time and preferred now to be considered incompetent instead of dishonest.
Airbus is to hold talks on compensation with several of its clients, notably Singapore Airlines, which was scheduled to take delivery of the first commercial A380 by the end of the year. – AFP