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EADS in turmoil over production woes, share sales

EADS grappled on Friday with a burgeoning controversy at its aircraft unit Airbus that has exposed communications lapses and threatens to revive Franco-German friction at the heart of the European aerospace group.

Noel Forgeard, co-chief executive at the European Aeronautic Defence and Space company, has been in the hot seat since Tuesday when Airbus announced that production problems would delay delivery of its A380 superjumbo airliner, the world's biggest civilian aircraft.

The news, coupled with a profit warning, sparked huge losses in EADS shares on Wednesday, when the group saw more than a quarter of its market value disappear.

EADS subsequently regained some ground and on Friday closed with a loss that was limited to 0.50 percent at 19.90 euros.

Over five days however, the group's stock shed 25.05 percent.

On Friday, Forgeard fought back against suggestions he may have acted improperly when he sold shares in EADS worth millions of euros in March, almost three months before the delays were announced.

"I had no privileged information," Forgeard insisted in a radio interview, adding that he when he sold the shares he had been unaware of the difficulties with the A380 program.

He said he learned only in April about the production delays.

"During a meeting in May, it seemed possible that the teams would be able to make up the delay," he said. "An in-depth analysis had been going on since the affair was discovered, which terminated on June 13 with the conclusion that we published the same day."

EADS too asserted there had been no irregularities in the stock sales. But amid the gathering controversy, the French financial markets regulator AMF said on Friday it had been investigating trading in EADS shares "for weeks."

"The most recent events will be examined in the framework of this investigation," the AMF said in a brief statement.

An AMF probe had been sought by an association of minority shareholders in France, known as ADAM.

The problems at Airbus and within EADS have also drawn attention to apparent breakdowns in internal communications and to the way the group kept customers and shareholders informed of production issues.

Forgeard, who headed Airbus until last year, on Wednesday implicitly implicated his German successor at the aircraft manufacturer, Gustav Humbert, saying: "During my time at Airbus we never missed the projections we gave."
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