Superjumbo Headache at Airbus

Big fat airplanes are not the only things rolling out of Airbus these days. A big fat scandal is on the taxiway, too.

French investigators are looking into some incredibly fortuitous stock sales by top executives of Airbus's parent, the European Aeronautic Defense and Space Co. The sales occurred in the days leading up to an announcement major delays to Airbus's new superjumbo airliner, the A380.

The probe, which focused on sales by former C.E.O. Noel Forgeard when it began last spring, has grown to include a host of other executives. Investigators are set to question leading executives at EADS, including co-chairman Arnaud Lagardere, Le Monde reports.

French financial regulators are examining whether about a dozen executives relied on nonpublic information when they decided to sell large numbers of shares before breaking the bad news about the A380. That announcement caused shares to fall more than 26 percent on one day, June 15, last year.

Airbus, along with EADS, is trying to rebound by implementing a restructuring plan to cut 10,000 jobs, which has drawn vehement union and political opposition in France and Germany where job security traditionally has been sacrosanct.

The Authority for Financial Markets--which started the review of Forgeard, who netted almost $12 million on his sales--has moved on to Jean-Paul Gut, deputy C.E.O. for the group. Gut was among the executives who sold their stock in March 2006, according to Le Monde.

The newspaper also reported that Manfred Bischoff, former co-chairman of EADS, is scheduled to be questioned Thursday, and Lagardere, co-chairman and head of media company Lagardere Group, will be questioned on May 29.

Last spring, Lagardere said he did not know about the problems that led to the delays in the A380, the world's largest passenger jet, which is Airbus's key product. However, the double-decker plane has been plagued with production problems such as the electrical wiring in the plane's cabin.

According to Le Monde, Gut admitted that he had been told of delays in the A380, but said he was also advised that they would not have a financial effect. He denied to investigators that he had given Lagardere information in advance of the official June 2006 announcement of the delay. Gut had worked for the Lagardere Group before joining EADS.

Taking a page from American shareholder activists, a small EADS shareholder complained about the hefty severance package Forgeard, who led Airbus from 1998 to 2005, was given when he was ousted in mid-2006.

Prosecutors in Paris have opened an inquiry into whether the package amounted to misuse of public funds. The French government holds a 15 percent stake in EADS.

by Elizabeth Olson

Photograph of an Airbus A380 by Paul J. Richards/AFP/Getty Images