Airbus in a Tailspin

There's no such thing as a golden rule of investing. But if there were, I'd guess it would go something like this: Don't invest money with managers you can't trust, especially if the insiders don't trust each other.

According to Bloomberg, Airbus co-chief executive Tom Enders has indirectly criticized French partner Noel Forgeard for ill-timed stock sales. Enders told Bloomberg through a spokesman that while it would have been lucrative to sell shares of stock in Airbus parent EADS weeks before problems with the A380 first surfaced, doing so wouldn't have been "appropriate."

Ouch. Bloomberg never did get clarification as to what constitutes "appropriate," but the statement intimates that Forgeard knew there were problems with the A380 superjumbo long before he pocketed 2.5 million euro in stock-driven profits.

The sales certainly look funny: Forgeard, three of his children, and two EADS board members all sold shares in March. Then, in early April, institutional holders DaimlerChrysler (NYSE: DCX  ) and LagadereSCA announced they would sell stock equaling roughly 15% of the outstanding shares.

For his part, Forgeard has called the sales nothing more than an unfortunate coincidence. Maybe, but as Foolish friend Seth Jayson points out, it was really unfortunate if you were an EADS shareholder. And Forgeard himself has told French media that internal reports of problems with the A380 first surfaced in April, not long after the sales in question.

French and German securities regulators are now investigating. It's anyone's guess as to whether charges will be filed, but I find it interesting that The Wall Street Journal reports that the French AMF (Autorite des marches financiers) has already been investigating events at EADS for "several weeks," and the latest news surrounding the A380 delay would be included in the probe.

Last week, I wrote that Boeing (NYSE: BA  ) might not profit much from Airbus' missteps. Both, after all, face production delays in key aircraft. But now it seems that's where the similarities end. Remember, the men in the pilot's seats of Boeing and Airbus must pull the firms out of their respective tailspins. Boeing CEO Jim McNerney has already proven he's capable of such a feat, first in his years leading a major division at General Electric (NYSE: GE  ) and then in the top post at 3M (NYSE: MMM  ) . Meanwhile, Airbus executives are left pointing fingers. I wonder -- is anyone watching the altimeter?

Avoid stock market turbulence by getting paid to invest. Grab aguest passto Motley Fool Income Investor and you'll getbackstage accessto all of the picks and research that have helped chief analyst Mathew Emmert beat the market by more than 4% as of this writing. Your free pass is good for 30 days; all you have to lose is the prospect of richer returns.

Chat with investors interested in 3M, anInside Valuepick, when you take a free trial to the newsletter and check out its discussion board.

Fool contributor Tim Beyers thinks a scoop of ice cream baking in the summer sun would be hard-pressed to melt down as fast as Airbus has. Tim didn't own shares in any of the companies mentioned in this story at the time of publication. You can find out which stocks he owns by checking Tim's Fool profile. The Motley Fool has an ironclad disclosure policy.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

DocumentId: 514210, ~/Articles/ArticleHandler.aspx, 4/17/2014 3:16:42 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement