| Like I am 'so surprised' |
SENIOR managers at Airbus's parent company, EADS, knew of delays in aircraft production when they sold their stock options in March 2006, shortly before the firm's shares crashed, it was reported yesterday. While the A380's delays were not officially mentioned during the board's meeting on 7 March, 2006, members did discuss "significant" hold-ups to the programme, as well as "serious industrial difficulties", the French business newspaper La Tribune has reported. The article cites as evidence a telephone conversation between Alain Garcia, the Airbus technical director who was present at the meeting, and Jean Galli Douani, a businessman. Mr Douani is in dispute with Airbus over a jet sale, according to La Tribune. Earlier this month, he handed over a recording of the 20-minute conversation with Mr Garcia to French investigators looking into the stock sales, the paper said. The conversations allegedly indicate that Mr Garcia told board members about problems with the A380 on 7 March, 2006 - the day executives began selling shares and three months before the delays were announced.
"This we deny categorically," a spokeswoman for Airbus, Barbara Kracht, said. "The A380 was not the subject of Mr Garcia's intervention." She did not say what was.
La Tribune also claimed it had an internal production document written on 6 March, 2006, which cut back the A380 delivery schedule for 2007 from 29 of the superjumbos to 24, leaving the plane-maker no margin for error. The board meeting was the next day, 7 March. That evening, Noel Forgeard, then the co-chief executive of Airbus, began the sale of millions of euros in his stock options, the report said. EADS' website shows that Mr Forgeard and other executives exercised stock options within two weeks following the 6 March meeting. Some 85 per cent of the company's 800 leading officials sold stock options soon afterwards, despite an 8 March announcement of record profits in 2005, the report said.
As far as ordinary shareholders were aware, Airbus was flying high, beating its American rival, Boeing, on orders in 2005 and expecting to increase profitability in 2006. But on 13 June, 2006, the board met again and announced new delays to the A380. EADS then issued a profit warning that sent its share price plunging 26 per cent in one day. The stock has yet to recover.
Mr Forgeard left in July with a widely criticised £5.7 million severance package, and a series of management changes ensued. The company announced a huge restructuring plan earlier this year that will mean thousands of lay-offs and factory closures.
