Last week, I had a little ramble about Boeing’s manufacturing issues with the 787 Dreamliner. This week, it’s Airbus’ turn to get raked over the coals, as its gigantor-plane, the A380, is going to have shipping delays because of wiring problems.
Airbus’ stock got hammered for this, and now there are some questions about stock sales by executives and their families, according to this WSJ (registration required) piece:
One key question surrounds large stock sales by [co-CEO of Airbus’ parent company] Mr. Forgeard, three of his children and other top EADS managers in mid-March. “We were not aware, not the shareholders, not the directors” of the A380’s problems at that point, Mr. Forgeard said. He said the troubles with the A380 surfaced in April, and that in late May they still seemed surmountable. EADS stock plummeted 26% Wednesday after the announcements of the delay and a profit warning. The stock price rose by Friday to €20.50 ($25.85). It remained well below prices in March, when Mr. Forgeard exercised €2.5 million worth of options at €32.01, and three of his children each sold €1.4 million worth of shares at the time at €32.82, according to the French stock-market regulator AMF. Board members Francois Auque and Jean-Paul Gut also sold shares.
The BusinessWeek piece on Airbus discusses more of the problems with the A380, which seems to me like the giant-SUV of airplanes. It’s funny that the European company comes up with that model as its big splash, while the U.S. company comes up with the smaller, lightweight, fuel-conscious 787.
I find the workings of various industries fascinating, but the airplane and airline businesses are particularly interesting to me. The battle between Boeing and Airbus helps me think about the role government subsidies and the WTO; changes in materials, manufacturing and design paradigms; economy-of-scale strategies for travel routes, and why the hub-and-spoke model collapsed; and how emerging markets are shaping policy (have any of you guys flown on Singapore Airlines or Emirates?).
(Update: More on the story — and how it affects airlines — at the NYTimes.)