France’s deadline to resolve EADS crisis expires

PARIS - A French deadline to resolve a management crisis that has rocked the European aerospace giant EADS, the maker of Airbus planes, was due to expire later Tuesday.

By (AFP)

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Published: Tue 27 Jun 2006, 7:34 PM

Last updated: Sat 4 Apr 2015, 1:13 PM

Finance Minister Thierry Breton held talks on Monday with key private shareholders in EADS, the French media and technology group Lagardere and the German industrial giant DaimlerChrysler.

But sources said that Breton would have difficulty in meeting his self-imposed deadline.

The French government has been under pressure to reorganise the company, which is 15-percent owned by the French state, after EADS admitted two weeks ago that deliveries of its flagship A380 superjumbo would be delayed.

Airbus had overtaken its US arch-rival Boeing in the highly competitive market for passenger jets, but Boeing is set to regain the lead this year. The A380 delay has sparked a crisis of confidence in Airbus’ ability to keep abreast of Boeing.

After EADS announced the A380 delay, share dealings by the French co-chief executive of the group, Noel Forgeard, came under scrutiny by the French market regulator. He and some family members, as well as other EADS executives, sold millions of euros worth shares in EADS in March.

French President Jacques Chirac said late Monday that 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, which reported sales of more than 30 billion euros (38 billion dollars) last year, he said ”something probably needs to be done and something will be done.”

Forgeard will find himself in the hot seat on Wednesday when he is due to be questioned by the French parliament’s finance committee.

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.

The German government however said on Monday it saw no reason to change the Franco-German management structure of EADS.

Another possible change could see EADS eliminating the chief executive position at Airbus and taking over direct control of the aircraft maker, a source close to the matter has said.

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, sources said.

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.

The A380 delay, coupled with a profit warning, sent EADS shares into a tailspin on June 14, when the group shed a quarter of its value. The share since then has re-gained some ground, but on Tuesday it had again fallen, losing 1.23 percent at 22.47 euros on the Paris CAC 40 exchange.

Thierry Breton “is determined to find a solution to the EADS problem within 72 hours,” said a finance ministry spokesman on Saturday.

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