Top managers at Airbus parent company EADS knew of delays in aircraft production when they sold their stock options in March 2006, shortly before Airbus shares crashed on a shock announcement, a French daily alleged on Tuesday.
The report came as the French financial market regulator questioned EADS co-chairman Arnaud Lagardere on Tuesday in connection with its probe of the stock option sale and possible insider trading.
The financial daily La Tribune on Tuesday reported that EADS managers were aware of delivery delays in the Airbus A380 superjumbo program on March 6, 2006, a day before an EADS board meeting and three months before the full extent of the problems was made public. The March 7 board session set in motion a regulated three-week period during which company executives were entitled to exercise stock options and sell shares.
The former co-chief executive at the European Aeronautic Defence and Space Company, Noel Forgeard, for example, pocketed 2.5 million euros (3.4 million dollars) from the sale of his options.
La Tribune said the principal private shareholders in EADS, the German automaker DaimlerChrysler and the French defence and media company Lagardere, on March 20 last year decided to sell stakes of 7.5 percent in the group. The sale, announced on April 4, earned each of them 2.0 billion euros at a time when the share was valued between 32 and 34 euros.
But on June 14, a day after an announcement of further A380 delivery delays, the EADS share price plunged more than 26 percent to 18.73 euros. An EADS source said on Tuesday that an "Airbus internal working session on March 6, 2006 revised the number of expected A380 deliveries in 2007 from 29 to 24, without any financial implications, and that there was therefore no reason to pass the information on to the board meeting the following day."
The findings were "confirmed on March 29, signifying simply that there was no longer any room to manoeuvre," the source said. "It was only later that we realised that problems with the electric cabling would reduce 2007 deliveries to nine."
He said the atmosphere at EADS had deteriorated in April and May of last year because of the DaimlerChrysler and Lagardere sales as well as an announcement by BAE Systems of Britain that it would sell its 20-percent stake in Airbus and because of necessary revisions to the A350 long-haul carrier. EADS in early October then disclosed that the A380 programme was two years behind schedule.
La Tribune also reported on Tuesday that in a telephone conversation between businessman Jean Galli Douani and former Airbus technical director Alain Garcia, Garcia said "serious industrial problems at Airbus" and "major" delays had indeed been mentioned at the March 7, 2006 board meeting.
A recording of the conversation has been handed to authorities, La Tribune said. Garcia, along with officials at both EADS and Airbus, strongly denied the substance of the conversation as reported by the paper.
A source close to the matter meanwhile said that Arnaud Lagardere was being questioned on Tuesday by the AMF, France's financial market regulator. Neither the AMF nor the Lagardere group would comment on the reported developments.
But when controversy broke last year over the A380 delays, which led to boardroom changes and a drastic restructuring plan at Airbus, and over the sale of options and shares in the company, both Lagardere and Forgeard insisted they had not been informed of the extent of the problems and that they had done nothing wrong.