Files Formal Complaint Against Airbus Parent

Allegations of insider trading at European Aeronautic Defense and Space (EADS,) over a six month period starting in November 2005, refuse to go away... and on Tuesday, the French financial market regulator filed a formal complaint against the aerospace consortium.

According to The New York Times, the Autorité des Marchés Financiers also demanded any and all evidence gathered during the regulatory agency's subsequent 18-month investigation be sent immediately to prosecutors in Paris, to be considered for possible use in a criminal trial.

As ANN reported, former EADS co-CEO Noel Forgeard and Airbus CEO Gustav Humbert resigned in July 2006, in the shadows of allegations of collusion by managers at the company to commit insider trading.

Forgeard and other EADS executives -- including current Airbus chief Thomas Enders -- are under investigation for dumping their company stock back in March 2006, two months before public talk of a second delay in the A380 program surfaced. Formal charges of insider trading were not established at that time, but both the German and French governments found it curious the executives got out at just the right time, and made money... while most other EADS investors rode the wreckage down.

Shares in EADS rose slightly Tuesday on the news of the investigation, a signal shareholders are eager to see the issue put behind EADS as quickly as possible. But prices are still down 35 percent over the past year... and more fallout could loom.

In related news, current EADS CEO Louis Gallois -- who was brought in to replace Forgeard -- stressed Tuesday all EADS managers implicated in the investigation, past and present, should be presumed innocent until proven otherwise.

"EADS will support its managers in their defense," Gallois said in a prepared statement. "It intends to demonstrate that it has applied standards of excellence when communicating to the market and has acted with full transparency."

News of the regulator's pursuit of justice comes as EADS planemaker Airbus is in the midst of its massive Power8 restructuring effort, and as the consortium grapples with the weakening US dollar against the Euro.

In better news, a partnership between EADS and Northrop Grumman recently beat out American planemaker Boeing for the US Air Force KC-X tanker contract... but even that decision is far from final, as Boeing and its supporters within the US government have mounted a loud protest of the ruling. Ongoing talk of unscrupulous business dealings at EADS will only fuel that fury.

"It is not going to do EADS and Airbus credibility any good at all that the prosecution issue has been raised against the same senior management that is responsible for delivering the US Air Force tanker program," analyst Doug McVitie told the NYT. "This is very bad publicity at a very bad time."

FMI: www.eads.com, www.airbus.com