The co-chief executive of the European aerospace group EADS and the head of its Airbus subsidiary paid with their jobs on Sunday for the crisis that has wiped billions of euros off the value of the company.
The two companies issued terse statements announcing EADS’s French co-boss Noel Forgeard and Airbus’s head Gustav Humbert, a German, were stepping down. Both were replaced by Frenchmen.
The German co-chief executive of EADS Thomas Enders stays in place. Forgeard is to be replaced by Louis Gallois, the chief of France’s state-owned SNCF rail company, while Humbert is to be succeeded by Christian Streiff, a former top executive for the French industrial group Saint Gobain.
”As president and chief executive of Airbus, I must take responsibility for this setback and feel the right course of action is to offer my resignation to our shareholders,” Humbert said in a statement.
Forgeard in particular has been under intense pressure to quit since it was revealed he sold EADS shares worth millions of euros nearly three months before the group on June 13 announced delays in deliveries of its Airbus A380 superjumbo.
The news of the delays wiped €5,5-billion ($6,5-billion) off EADS’s market value and left Airbus trailing United States rival Boeing.
Last week, when he was questioned by a French parliamentary finance committee, Forgeard had ruled out resigning, saying: ”I am competent and honest. It is out of the question.”
He has said he was unware of the A380 difficulties when the sales were made and insisted he acted with no ”privileged information”.
The French government has taken a significant role in addressing the problem, a reflection of its 15% stake in EADS, a largely Franco-German group, and of Forgeard’s one-time role as advisor to President Jacques Chirac.
French Finance Minister Thierry Breton said on Sunday that the French state, as an EADS shareholder, supported the proposed management changes.
”The state supported the proposal made by the industrial participants,” Breton said.
Forgeard (59) jointly ran EADS with Enders, who will have hierarchical superiority over Gallois.
Forgeard was named to head EADS last year, after a successful run at the helm of Airbus, and was seen as wanting to do away with the two-headed leadership of EADS — a structure that frustrated his forthright and forceful style.
Gallois (62) who has had a long career in government and state companies, brings experience from stints in SNECMA, France’s jet engine manufacturer, and in the former Aerospatiale aerospatial group. He was named to lead the SNCF in 1996.
The French government said that he would be replaced by the head of Paris’s main public transport operator, RATP, Anne-Marie Idrac, who herself would be replaced by Pierre Mongin the head of the Cabinet of French Prime Minister Dominique de Villepin.
Streiff (51) rose through the ranks of Saint-Gobain, France’s oldest industrial company founded 241 years ago as a glassmaker, getting as far as second-in-command.
The A380 superjumbo airliner was seen as the jewel in Airbus’s crown, a 21st-century airliner designer to surpass Boeing’s ageing 747.
The delays, resulting from production problems, means airlines that have ordered the double-decker aircraft will have to wait six or seven months more before taking delivery — raising the probability of them asking for hundreds of millions in euros’ compensation from Airbus.
EADS has said that only nine of the A380 aircraft, instead of 20-25, would be delivered in 2007, seriously affecting financial results.
Airbus is to hold talks on compensation with several of its clients, notably with launch customer Singapore Airlines.
EADS, the European Aeronautic Defence and Space company, currently owns 80% of Airbus, while BAE Systems of Britain holds 20% but has signed an agreement to sell this stake to EADS.
The French stock market authority AMF said Forgeard, his children and a handful of other senior EADS officials also sold significant numbers of shares in March for several million euros.
It said that, on March 15, Forgeard sold 162 000 EADS shares for a profit of €2,5-million ($3,2-million). A week earlier, on March 9, he had exercised an option on another three million euros in shares, but there was no record of a sale.
Between March 15 and 17, Forgeard’s three children, Louis, Catherine and Marie Forgeard, sold €4,1-million in shares.
And between March 8 and 20, senior EADS executives sold 232 000 shares for an aggregate profit of €2,5-million.
EADS also announced late on Sunday that according to an independent assessment by investment bank Rothschild, it should pay BAE Systems €2,75-billion euros ($3,5-billion) for the British company’s 20% stake in Airbus.
BAE Systems said on June 7 that it wanted to sell its 20% stake in Airbus to EADS, lifting EADS’s stake in Airbus to 100%, but after failing to agree on price both firms hired Rothschild for an independent appraisal.
EADS had a choice to pay Airbus in cash or shares, and has decided to pay in cash, it added. The deal remains subject to BAE Systems shareholder approval. – AFP