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Airbus executives on trial

October 3, 2014

An insider trading trial has kicked off in Paris, centering on managers at Europe's largest aerospace group, Airbus, and major shareholders. The charges say defendants knew stocks would plummet before they sold them.

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Airbus A380
Image: dapd

Past and present executives of Airbus stood trial in Paris on Friday alongside two former industrial shareholders, facing accusations of profiting from insider trading.

The charges included dumping shares in 2006 in what was then EADS, on account of problems with two jets and negative financial prospects for the company.

Specifically, prosecutors will try and convince the judges that the defendants were fully aware of the problems with the A380, the world's largest passenger jet, and of the potentially steep costs of redesigning the A350 when they sold stock.

Defendants will argue that the extent of setbacks, missed production deadlines and ballooning costs only became clear after they sold their shares and that overhauling the design of the A350 was not the most likely thing to expect.

The defendants include current managers John Leahy, Alain Flourens and Andreas Sperl, former manager Noel Forgeard, the French media group Lagardere and the German auto manufacturer Daimler. The latter two are under fire for selling a number of shares in EADS before an announcement caused the company's stock price to fall sharply. All of them deny the charges.

In fact, their denial could carry more weight than normal as all of the defendants have been cleared by the French stock market regulator.

In late 2006, then-EADS told the public that building the A380 was taking much longer and costing much more than anticipated. The company also issued a dire profit warning, and the combination of the two sent shares spiraling down 26 percent. In all, 5.5 billion euros ($6.95 billion) were lost.

cjc/ng (Reuters, dpa)