THIS should have been an Indian summer for EADS, the Franco-German group that owns Airbus. Instead, top executives of Europe’s leading civil aeronautical enterprise are under a legal cloud as an alleged insider-trading scandal has engulfed both business and political leaders.

There was sunshine. Last month British Airways placed a ground-breaking order for 12 double-decker A380 airliners – the British company has never bought a long-haul Airbus plane until now – and Airbus is due finally to deliver the first of the giant sky cruisers to Singapore Airlines on October 15.

But the big chill arrived on Wednesday, when Le Figaro, the French newspaper, published details of a preliminary report from the market watchdog Autorité des marchés financiers (AMF), sent to the Paris public prosecutor’s office. The report pointed to “parallel and massive” selling of EADS shares months before the firm announced delays on the A380 in June last year.

The regulator’s year-long investigation showed that 1,200 people are suspected of using inside information to sell more than 10m EADS shares, pocketing almost €90m (£62.3m) in profit. The AMF decided to concentrate its inquiry on 21 senior managers, including former and present executives, some of whom exercised stock options to divest their holdings.

According to French reports, those being investigated include the former French and German EADS joint chief executives Noël Forgeard and Tom Enders. Forgeard has since left the company, but Enders is still boss of Airbus. The group’s former No 2, Jean-Paul Gut, is also under scrutiny, as is human-relations boss Jussi Itavuori. EADS’s French and German industrial shareholders, Lagardère and Daimler, are also suspected of trading on privileged information in reducing their stakes.

Daimler and Lagardère both cut holdings unexpectedly early, each selling 7.5% stakes of respective holdings in April 2006. Lagardère used financial engineering to sell at a guaranteed price in the mid€30s, even though the sale will not be completed in two years’ time. The shares closed last week at €22.31.

The two companies had been expected to sell from 2007, as favourable tax treatment becomes available only this year.

The finance committee of France’s senate upper house called Thierry Breton, the former minister of economy, finance and industry, last Friday to answer questions on his role in green-lighting Lagardère’s share disposal. Breton has protested his innocence and said it was not the government’s role to allow or disallow Lagardère’s sale.

There is a dispute over that interpretation, with critics accusing the government of failing to warn shareholders of the impending share crash. The French state owns 15% of EADS.

Arnaud Lagardère, scion of the eponymous founder Jean-Luc Lagardère, is a close friend of President Nicolas Sarkozy, who was interior minister in November 2005. Lagardère has said in selling down his company’s stake that if it came down to being dishonest or incompetent, he preferred being called incompetent. His comment is widely viewed as a major gaffe.

All concerned deny insider trading, and Lagardère has threatened to sue those behind the press leak. EADS has said it is surprised at the reports, which it claimed violated the legal principle of presumption of innocence.

The AMF has pointed up the “strange” nature of the sales, including the fact that 14 of the 21 had never sold shares before November 2005. The task facing the AMF and the separate judicial inquiry is to show these managers intentionally sold shares, knowing full well about the A380’s production problems but before these were made public.

After EADS issued its notice on June 13 last year detailing the A380m hold-ups, the shares crashed 26%. The next day, EADS held a glittering reception in the grounds of the Rodin museum, as part of corporate hospitality for an arms show, Euro-satory. As a security helicopter clattered overhead, an EADS wag joked it was there to protect executives from irate shareholders.

The gallows humour was warranted. When small shareholders learnt that senior EADS and Airbus executives had exercised options in November 2005 and March 2006, they were incensed.

The latest revelations have only stoked that rage.

“Anger and indignation are what stand out when reading the report,” said Xavier Petrachi, a CGT union official at Airbus France. The head of the FO union, Jean-Claude Mailly, said it would have been better if “the managers and shareholders of EADS had concerned themselves with industrial strategy rather than trying to make money”.

The allegations of insider trading are bad but the timing makes it worse still. Some 10,000 Airbus workers face an uncertain future as EADS has sought buyers for six factories, plus one German site, in a bid to cut production costs.

Airbus must push through a restructuring plan to combat the acute weakness in the dollar. But where there was once a pride in the French workforce, there is now sullen anger and resistance.

In France, editorialists from business-friendly newspapers such as Les Echos and Le Figaro laid into the management. Although the leader writers qualify their words with the conditional, “if confirmed . . .” dismay is palpable.

A conservative paper, Le Figaro – owned by aircraft maker Serge Dassault – points out that the French are not fond of capitalism, and will see in the EADS scandal the evidence that the rich are not like us, and may be above the law. Outrage over EADS could push the government into hasty legislation on stock options and the granting of free shares.

Les Echos said of the executives’ actions: “They are of extreme gravity, because they reveal irresponsible behaviour and inadmissible drift.”

A London analyst views poor internal reporting over A380 as the fault of Forgeard when he was Airbus chief executive. Information was grudgingly sent up to EADS and there was a culture of “bad news is punished” in Toulouse, Airbus’s headquarters. That led to late reporting of the A380’s production snags, which only made things worse.

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive