France is set to unveil a reorganisation of European aerospace giant EADS in the next few days amid sustained efforts by the government to clear the air of controversy over production problems, communication breakdowns and share dealings.
French Finance Minister Thierry Breton has given himself a deadline of Tuesday to resolve a management crisis that has struck the group, which is 15% owned by the French state.
EADS, which reported sales of more than €30-billion last year, is the parent company of European aircraft manufacturer Airbus, the chief rival to Boeing of the United States.
Breton held talks on Monday with private shareholders in EADS, namely French media and technology group Lagardere and German industrial giant DaimlerChrysler, but sources said his deadline would be difficult to meet.
“Even though discussions continue, no solution has been found for the moment,” said one source.
Breton is seeking to resolve governance problems revealed by news that Airbus, which is 80% owned by EADS, has experienced production problems for its super-jumbo airliner, the A380.
In the wake of the announcement, share dealings by the French co-chief executive of the group, Noel Forgeard, have come under scrutiny by the French market regulator. He and some family members, as well as other EADS executives, sold shares in EADS in March.
Managers are prohibited from selling shares in their company based on privileged information that has not been announced to the financial markets.
Forgeard has defended the sales, insisting he was unaware of the production difficulties at Airbus when he sold his shares. He has said he first learned of the problems in April.
French President Jacques Chirac said late on Monday in a television interview he would be “shocked” if it turned out that Forgeard had acted irregularly, but that he would not prejudge the investigation of stock market authorities.
As regards difficulties managing EADS he said “something probably needs to be done and something will be done”.
The crisis has prompted questions about communication between the management of Airbus and EADS, as well as the effectiveness of EADS’ unusual management structure, which is split between French and German executives.
Industry experts have suggested several changes that could be made, but any solution would have to take into account the dual management of the company.
Frenchman Forgeard shares the chief executive position with his German counterpart, Thomas Enders.
Another possible change could see the Franco-German co-leadership of EADS eliminating the chief executive position at Airbus and taking over direct control of the aircraft maker, a source close to the matter told Agence France-Presse on Saturday.
Any changes would have to be adopted by the EADS board of directors which is scheduled to meet on July 13. But the session could be brought forward to approve modifications, the source said.
The nomination of Forgeard to the head of EADS in 2005 was strongly backed by Chirac.
The EADS episode has been seized on by France’s Socialist opposition as an example of management incompetence. The opposition has accused the government of being too passive.
Forgeard will find himself in the hot seat on Wednesday when he is to be questioned by the French Parliament’s finance committee.
EADS, Lagardere and DaimlerChrysler declined to comment on the discussions with Breton on Monday. – AFP