Pledge to end crisis at Airbus parent

The French government has pledged to take action to end the crisis at Airbus parent company EADS a week after a huge drop in shares in the European aerospace group.

    The 55- seat A380 superjumbo is a year behind schedule

    Dominique de Villepin, the French prime minister, said on Wednesday the "all necessary measures" would be taken.

    Shares in the European Aeronautic Defence and Space Company dropped by 26% when Airbus announced more delays to A380 superjumbo aircraft.

    The French government owns 15% of EADS but under current company statutes operational decisions are left to the private shareholders, the French defence and media group Lagardere SCA and German carmaker DaimlerChrysler AG.

    EADS shares rose 6.5% on Tuesday after Villepin and Thierry Breton, the finance minister, said the government was seeking changes to the company's management and ownership structures.

    The German government is likely to resist any move by France to increase its influence over the aerospace company. The crisis at EADS has already caused "some concern" in Berlin, Michael Glos, the German economics minister, said on Tuesday.

    Under scrutiny

    Six EADS executives, including French co-chief executive Noel Forgeard, exercised stock options just weeks before management ordered an assessment of production hitches with the Airbus A380.

    France's Financial Markets Authority is investigating possible insider dealing at the company.

    EADS co-chief executive is being
    investigated over stock sales

    Forgeard denies any wrongdoing, saying he sold the shares before he found out about the production delays.

    EADS too insisted there had been no irregularities in the stock sale.

    Airbus said the delays were caused by problems with the plane's 500 kilometres of wiring, a similar problem that caused a six-month delay a year ago.

    The Airbus has been plagued with problems. It has been overweight and over-budget at various stages of its development, and now the double-decker plane is now more than a year overdue.

    The first A380 will be delivered to Singapore Airlines by the end of the year as planned but deliveries from 2007 onwards will be reduced due to production problems.

    SOURCE: Agencies


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