Forgeard: I'm Still the Best Hope for Airbus

A determined Noel Forgeard vowed Wednesday to stay on as co-chief executive of defense group EADS and help civil jet unit Airbus through its current crisis, despite German demands for his resignation and questions about suspect share sales.

The comments, relayed to reporters by French lawmakers after a closed-door parliamentary hearing where Forgeard testified, were confirmed by a person close to the French CEO, speaking on condition of anonymity.

Forgeard declared during the two-hour committee hearing that his resignation was "out of the question," several of the deputies said afterward. He also defended a controversial sale of EADS stock that netted him 2.5 million euros ($3.1 million) just weeks before the Franco-German company launched an internal assessment of new delays to the Airbus A380 superjumbo. He denies insider dealing.

EADS' main corporate shareholders, Lagardere SCA and DaimlerChrysler AG, are in talks on management changes at the group, whose shares plunged 26 percent on June 14, when the production hitches were announced.

The two shareholders, with a combined 37.5 percent stake, are addressing communication and reporting problems that kept EADS bosses in the dark about the delays until it was too late to avert a serious crisis of investor confidence. The French government, which owns 15 percent of EADS, also has to approve any deal.

The embarrassment at EADS and Airbus can only get worse unless a reshuffle is agreed and implemented before Britain's Farnborough Air Show, which opens July 17.

DaimlerChrysler favors replacing the two EADS co-CEO and two co-chairman positions with a single chairman and single chief executive, but would be ready to maintain the current line-up providing Forgeard steps down, people close to the discussions said.

Lagardere, a Paris-based media and defense company, has so far refused to sanction Forgeard's sacking, people said, adding that an agreement could be reached as soon as this week.

All of those who asked not to be identified in interviews with The Associated Press cited the confidentiality of the discussions as the main reason for the request.

DaimlerChrysler CEO Dieter Zetsche declined to comment directly on Forgeard's position, during a meeting with reporters in Detroit.

Asked about the Forgeard's stated intention to stay on, however, Zetsche said it was board members that "usually have the rights to make decisions on personnel questions."

Media officials for EADS and Lagardere did not respond to calls and messages seeking comment.

One proposal under discussion would see both CEO posts kept, with one devoted entirely to troubleshooting at Airbus - a plan Forgeard endorsed at the hearing, while underlining his own suitability for the job.

"In response to our German friends, some of whom are demanding his resignation, CEO Forgeard responded very calmly that resigning was out of the question, given his past (experience) and the service he can offer," said Pierre Mehaignerie, the governing UMP party lawmaker who heads the parliament's financial affairs committee.

Forgeard, who served as Airbus CEO from 1998 until last year, is credited with the aircraft maker's development into a serious competitor to Chicago-based Boeing Co.; Airbus has won more orders than Boeing every year since 2001.

But it was also on his watch that the first, six-month A380 production delay occurred, and an under-ambitious design for the A350 - billed as a rival to Boeing's 787 Dreamliner - went back to the drawing board. Concern mounted in Toulouse when Boeing took the lead last year on overall order value, as higher fuel prices boosted the 777 and punished the less fuel-efficient Airbus A340.

France's Financial Markets Authority is investigating Forgeard and the five other directors who exercised stock options in March, as well as the timing of an April 4 announcement by Lagardere and DaimlerChrysler that the two companies planned to trim their EADS stakes.

Overall, 70 percent of 250 eligible EADS managers exercised stock options in March, Forgeard said. The company's stock-option plan was an effective motivational tool and should not be scrapped, he added.

Parliamentary criticism of Forgeard appeared to weaken on Wednesday, after what was described as a confident performance by the 59-year-old former adviser to President Jacques Chirac. Some lawmakers voiced support for his refusal to step down.

"Who would benefit?" asked Jean-Pierre Balligand of the opposition Socialist Party, which had been pressing the government to distance itself from Forgeard. "The destabilization of EADS would be a good thing for Boeing."

But committee chair Mehaignerie said Forgeard's fate was now in the hands of the market regulator. Until it rules on the case, he said, "the doubts remain."

Shares in European Aeronautic Defence and Space Co. fell 3.9 percent to close at 21.22 euros ($26.67) in Paris.

Tom Krisher contributed to this report.


Copyright 2005 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

News stories provided by third parties are not edited by "Site Publication" staff. For suggestions and comments, please click the Contact link at the bottom of this page.

Loading