French market regulators urge action against Airbus

French regulators recommended Tuesday that executives at Airbus and parent European Aeronautic Defense & Space Co. face insider trading penalties or charges linked to costly delays of the A380 super-jumbo jet and said the company had misled markets.

Winding up an 18-month probe, market regulator AMF said it would hand its evidence to its own sanctions committee and to public prosecutors who would be able to question senior EADS officials separately over events dating to 2005.

EADS defended its record of transparency and vowed to support its managers but warned the probe could have “significant consequences on its image and reputation.”

The probe has threatened to reopen chronic management and political battles surrounding Europe’s largest aerospace group.

The investigation was triggered by worsening A380 production delays, which sliced a quarter off EADS’ stock price in June 2006.

Top shareholders Lagardere Group and Daimler and several managers sold shares but deny doing so with the knowledge that the schedule for the world’s largest aircraft was unraveling because of a software clash between French and German plants.

Former EADS co-Chairman Arnaud Lagardere said after the delays he would rather be thought of as “incompetent instead of dishonest” for not knowing what was happening in Airbus plants.

Sources familiar with the matter said Arnaud Lagardere and Daimler’s Manfred Bischoff had been cleared by the AMF. But their companies would be questioned on whether they neglected responsibilities on the handling of unpublished information.

A source close to the matter said the AMF report to the prosecutor cited 17 individuals and three firms.

EADS declined comment on a report that 17 of its own executives had been targeted for possible insider trading. The company itself is being pursued for poor communication to the markets.