Executives Step Down Over Delays at Airbus

Parent Firm Tries to Win Back Investors, Customers After Problems With A380

PARIS, July 2 -- Noel Forgeard, the co-chief executive of European defense group EADS, stepped down Sunday as part of a management shake-up aimed at restoring investor and customer confidence after Airbus disclosed production delays for its new A380 super-jumbo jet.

Airbus head Gustav Humbert also resigned and was succeeded by Christian Streiff, a former executive with building materials maker Compagnie de Saint-Gobain SA, EADS said in a statement.

Louis Gallois, head of France's SNCF rail operator and former chairman of engine maker Snecma, steps in for Forgeard. He will work alongside European Aeronautic Defence and Space Co. co-chief executive Thomas Enders.

The defense group has been searching for ways to win back the confidence of displeased airlines and investors since shares plunged 26 percent June 14 on news of A380 production delays of up to seven months. The company said the production hitches would cut $2.5 billion from profit over four years.

The announcement led some airlines to ask for compensation or say they were reconsidering their orders. The same day shares dropped, crucial customer Singapore Airlines signed a $4.52 billion deal for 20 Boeing 787-9 aircraft, a rival for Airbus's problem-plagued A350.

The crisis prompted calls for a change in the leadership of EADS, which is run jointly by French-German management. EADS controls Airbus through an 80 percent stake, with Britain's BAE Systems PLC holding the rest.

Also on Sunday, EADS said an arbitrator had valued BAE's Airbus stake at $3.5 billion. EADS said it was prepared to pay that amount in cash, and BAE said its board would consider the matter.

BAE Systems said it would receive net proceeds of $2.1 billion after offsetting outstanding loans between BAE and Airbus, as well as transaction costs. BAE has exercised a put option, which effectively forces EADS to buy its Airbus stake.

EADS's two main shareholders, Lagardere SCA and DaimlerChrysler AG, with a combined 37.5 percent stake in the group, have been trying to resolve communication problems within the companies.

Negotiations about the management shuffle dragged on as DaimlerChrysler pushed for Forgeard's sacking but resisted Humbert's departure, the official said. The decision to dismiss both of them splits the blame for the A380 delays between the men, said the source, who asked not to be named because the talks were confidential.

Forgeard has also been under pressure for a sale of EADS stock that brought him $3.1 million just weeks before management ordered an internal study of the production problems. He denies insider dealing and says the timing was an unfortunate coincidence.

A person familiar with the shareholder talks said the sale of shares was not the reason for Forgeard's dismissal. France's Financial Markets Authority is still investigating Forgeard and the five other directors who exercised stock options in March.

In exchange for sacrificing Forgeard, French shareholders gained an important post within EADS, where management positions are delicately balanced between German and French executives. Humbert is German; his replacement, Streiff, is French.

Forgeard, who served as Airbus chief executive from 1998 until last year, is credited with making the company a serious rival to Chicago-based Boeing Co. Airbus, based in Toulouse, France, has won more orders than Boeing every year since 2001.

But it was also under Forgeard's leadership that a first, six-month A380 production delay occurred, and an under-ambitious design for the A350 -- billed as a rival to Boeing's 787 Dreamliner -- was sent back to the drawing board.

Forgeard insisted last week that he would not step down and promised to steer Airbus through its crisis. In a statement Sunday, he said his resignation was voluntary. He also said neither the stock sale nor Airbus's operational problems were the reason for his departure.

"I did it solely for the company's interest, to end a situation that could have compromised the resolution of Airbus' current problems and EADS' development," Forgeard said.

Humbert, who worked his way up through Germany's aerospace industry, was appointed Airbus chief executive last year after working for the company for several years. In a statement, he acknowledged that the A380 problems were "a major disappointment for our customers."

He added, "As president and CEO of Airbus, I must take my responsibility for this setback."