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Last Updated: Monday, 3 July 2006, 12:22 GMT 13:22 UK
Q&A: Strife at Airbus
An A380 after making a trial landing at Heathrow
The A380's problems are a big headache for both EADS and BAE

Executives at aviation firm Airbus and its parent company have quit after embarrassing delays to its flagship A380 project.

An independent report has also indicated that Airbus is worth much less than was expected - a real headache for shareholder BAE Systems which is looking to sell its stake.

Who has resigned and why?

Gustav Humbert, one of Airbus's two co-chief executives, quit on Sunday.

Noel Forgeard, one of the two men at the helm of the European Aeronautic Defence and Space Company (EADS) - the company which effectively controls Airbus - has also stepped down.

Both men had been under intense pressure after Airbus revealed last month that its A380 superjumbo would be delayed by seven months.

The delay - caused by technical problems - means that some of the world's leading airlines will have to wait longer to take delivery of the industry's largest passenger plane.

EADS (France/Germany/Spain): 80%
BAE Systems (UK): 20%

Mr Humbert said he was accepting responsibility for the delay, a setback which led to a collapse in EADS' share price and may ultimately cost the firm up to 2bn in lost profits.

DaimlerChrysler: 22.3%
French government: 15%
Lagardere: 15%
Spanish government: 5.4%
Others: remainder

Mr Forgeard was accused of failing to keep shareholders properly informed about the A380's difficulties which first came to light in April but which were only revealed to the market last month.

He also faced accusations about his own behaviour after it emerged that he and other executives sold shares in EADS weeks before the production problems first surfaced.

He said he had no prior knowledge of the A380 problems when he sold the shares but regulators are investigating trading in its shares.

Who is in charge now?

Mr Forgeard has been replaced at EADS by Louis Gallois, the former head of aerospace firm Aerospatiale and railway operator SNCF.

Mr Humbert, meanwhile, has been succeeded by Christian Streiff, a former executive at building materials firm Saint-Gobain.

French Prime Minister Dominique de Villepin
French ministers have been dragged into the crisis

Under EADS's complicated management structure, Mr Gallois will work alongside existing co-chief executive Thomas Enders.

EADS also has two chairmen, one French and one German.

The structure is supposed to ensure that the firm's French and German interests are fully represented but critics say the arrangement is dysfunctional and that it has contributed to its recent problems?

How much is Airbus worth?

According to a new analysis by investment bank NM Rothschild, BAE Systems' 20% stake in Airbus is worth 2.75bn euros (1.9bn).

This is considerably lower than had been expected, reflecting the perceived financial damage done to the business by the recent delays to the A380.

Why is this valuation so important

BAE Systems wants to sell its 20% stake in Airbus to EADS, which currently owns the remaining 80% of the business.

It says the asset is peripheral to its main defence and aerospace operations, increasingly focused on the US.

Spectators at an air show standing in front of an A380
Early euphoria about the A380 has waned a little

Under the terms of its ownership agreement, EADS is obliged to buy out BAE's stake once it decides to sell but the two have not been able to agree on the price it should pay.

As a result, they asked Rothschilds to provide an independent assessment of its worth, which the two sides have now accepted.

BAE Systems must now decide whether to sell the stake at that price or keep hold of it in the hope that Airbus' value will increase.

It plans to use the proceeds of the deal - expected to be more than 1.1bn - to strengthen its finances and fund future acquisitions.

What happens next?

BAE's board of directors will decide in the next few weeks whether to recommend the share sale.

But the final decision will come down to the company's shareholders which must approve the decision at a special meeting.

The gathering could prove controversial as some BAE shareholders are thought to be angry about how EADS has handled the situation.

What will happen to Airbus' UK staff?

Airbus employs 13,000 UK staff, mainly at Broughton in North Wales and at Filton in Bristol, producing wings for the A380 and other planes.

Tom Enders (left) and Noel Forgeard
Mr Forgeard has gone but Mr Enders remains

Airbus has said it is committed to retaining manufacturing in the UK even if BAE sells its stake in the business.

Its staff will remain members of BAE's pension scheme, receiving their current level of contributions, until 2011.

After that date, Airbus says it will consider a range of options to provide the "most appropriate solution" for pension provision.

How does this affect Airbus's global position?

Airbus and Boeing are fighting a fierce battle for pre-eminence in the fast-growing global aviation market.

Some fear the negative publicity surrounding the A380 delays could force some airlines to defect to Boeing, which believes many airlines don't need a plane as large as the A380.

It is placing its faith in the 787 Dreamliner, a smaller 250-300 seat aircraft, which will go into service in 2008.

Experts still believe Airbus will sell more than enough A380s to break even but fear it could take much longer than originally planned.

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