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Execs bail out amid Airbus turbulence

Stephen Beard Jul 3, 2006

TESS VIGELAND: Two top executives at the European planemaker Airbus and its parent company lost their jobs over the weekend. The two men were forced out of office two weeks after announcing yet another delay in delivery of the company’s new superjumbo jet, the A380. That announcement sent shares in parent company EADS plunging by more than 25 percent. Meanwhile, Airbus rival Boeing signed a deal with European discount airline Ryanair for 10 more 737s. From the European Desk in London, Stephen Beard reports.

STEPHEN BEARD: After the turmoil of the past two weeks, someone was going to get the chop. And they have. The first head on the block belonged to Noel Forgeard, the co-chief executive of EADS, Airbus’ parent company. He’s been fired after admittting that he sold some of his stock options shortly before revealing the bad news about the A380.

Commentator Philippe Chatenay says the French public clamoured for him to go. They felt so incensed because EADS is still part-owned by the French state.

PHILIPPE CHATENAY: I think in the minds of the French EADS belongs to all of us. And so I think we not only find that Mr. Forgeard’s methods are quite repugnant, but also that he’s taking all our money.

But the crisis goes much deeper. The head of Airbus itself has also been fired. He’s carrying the can for the delays in the A380. The delays could cost the company $2.5 billion in penalty payments. An independent valuation of Airbus, coincidentally published today, put its worth at about half what most people expected.

ALEX ASHBOURNE: In the light of the events of the past few months, it is a depressingly realistic valuation.

Analyst Alex Ashbourne says Airbus is in deep trouble, and the A380 isn’t the company’s only problem:

ASHBOURNE: Also the A350, which is their potential competitor to the Boeing 787 Dreamliner — the smaller, 150-200 capacity aircraft — is having some design issues.

Meanwhile Boeing goes from strength to strength. Airbus’ only consolation is that Boeing, too, was tainted with scandal and failure only a few years ago, and it recovered.

In London, this is Stephen Beard for Marketplace.

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