EADS office raided as pressure grows on co-CEO

PARIS - French regulators raided the Paris offices of Airbus parent EADS today, piling extra pressure on a company grappling to contain a fierce internal feud sparked by a costly delay to the A380 superjumbo.

EADS said the AMF market authority had visited its French headquarters as part of a probe into share trading leading up to the shock mid-June announcement of A380 delays and a profit warning which sheared a quarter of the value off its stock.

"EADS is continuing to fully co-operate with AMF on these matters," the company said in a statement.

EADS is headquartered in Paris and Munich.

The probe is widely seen as crucial to the future of Co-Chief Executive Noel Forgeard, facing a media and political storm over a €2.5 ($5.20 million profit he made from stock options before big stakeholders sold shares in March.

Forgeard suffered a setback when President Jacques Chirac failed to offer clear support in a TV interview yesterday.

Chirac said his former aide could not count on much support if an inquiry concluded he knew about the A380 delays before selling EADS shares earlier this year. "If this is established, then I would be shocked," Chirac told France 2.

His mentor's comments left Forgeard looking increasingly isolated as he fends off pressure for his dismissal over the A380 delays and a public outcry over stock options in general.

"It is the core battle. I would be surprised if (Forgeard's position) is not part of the final game plan," a source close to the matter said, asking not to be identified.

Chirac's backing helped Forgeard win a power battle with the EADS German camp last year when he was promoted from Airbus.

However he lost other strategy battles and industry analysts say Forgeard's progress has left scores waiting to be settled.

French satirical weekly Le Canard Enchaine reported German Chancellor Angela Merkel had complained about Forgeard in a phone call with Chirac last week and called for his dismissal.

A German spokesman said: "I am not aware of a conversation last week between the chancellor and the French president." EADS branded a leaked internal report summarising Franco-German differences over the handling of A380 problems in May as an attempt to play up reports of company divisions.

Forgeard is due to give evidence to a parliamentary panel tomorrow and is expected to try to use the time bought by the unfinished AMF probe to give his version of events.

He has said he was not aware of either the shareholder moves or the A380 delays when he and five others sold shares.

Supporters say France has too much to lose inside EADS if the fiery executive is kicked out, but his local power base and standing with the financial markets appear increasingly thin.

"From my viewpoint, the structure stays, but Forgeard goes," said a London-based aerospace analyst, asking not to be named.

EADS shares fell 3 per cent to 22.08 euros.

Tensions over who knew what and when as the world's largest aircraft manufacturer found A380 wiring installation problems overshadowed efforts by top EADS shareholders to agree on a plan to streamline its dual corporate structure or management.

French Finance Minister Thierry Breton said solutions were being finalised "in accordance with the pact".

Anxious to avoid embarrassment over the expiry of a 72-hour deadline which he had imposed on the shareholder talks at the weekend, Breton told a separate forum, however, that decisions had been reached on Sunday but not yet announced.

The finance minister has been seeking to put maximum pressure on industrial partners Lagardere and DaimlerChrysler. The government's hands are tied in forcing through changes to the EADS shareholder pact.

Sources close to the talks said a swift announcement on the future of EADS had been shelved and may not be ready until next week. "Nothing has been announced, because it is not ready," said one source, asking not to be identified.

- REUTERS