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Top executives resign after Airbus delays

/ Source: The Associated Press

Noel Forgeard, the co-chief executive of European defense group EADS, stepped down Sunday as part of a management shake-up to win back investors’ confidence after its commercial plane unit Airbus announced delays for the new A380 superjumbo jet.

Airbus head Gustav Humbert also resigned and was succeeded by Christian Streiff, a former executive with French 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 current EADS co-CEO Tom Enders.

The defense group has been searching for ways to win back the confidence of airlines and investors since shares plunged 26 percent June 14 on news of A380 production delays of up to seven months. The European Aeronautic Defence and Space Co. controls Airbus through an 80 percent stake, with Britain’s BAE Systems PLC holding the rest.

The announcement — which will cut an estimated 2 billion euros ($2.5 billion) from profits over four years — prompted calls for a change in the leadership of EADS, which is run jointly by French-German management.

EADS’ two main shareholders, Lagardere SCA and DaimlerChrysler AG, which hold a combined 37.5 percent stake in the group, have been trying to resolve communication problems within the companies. EADS bosses were unaware of the delays until it was too late to prevent a major crisis of investor confidence. The shake-up will give EADS tighter control of Airbus.

Forgeard has also been under pressure for a sale of EADS stock that brought him 2.5 million euros ($3.1 million) just weeks before management ordered an internal study of the production hitches. He denies insider dealing and says the timing was an unfortunate coincidence.

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 CEO 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 that neither the stock sale nor Airbus’ operational problems were the reason for his departure and pointed out that he had left the jet maker a year ago.

“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,” he said.

Humbert, who worked his way up through Germany’s aerospace industry, was appointed Airbus chief executive in 2005 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.”