DaimlerChrysler and Lagardère met on Friday in a last ditch effort to agree a recovery plan for the crisis-ridden aerospace group EADS before an informal meeting between French President Jacques Chirac and Germany’s Chancellor Angela Merkel on Monday.

People close to the talks said on Friday night the two sides appeared to be moving closer towards an agreement but last minute hitches could still emerge. Nevertheless both sides were hopeful on Friday that an announcement could come early next week.

Any further delay would not be welcomed by French President Jacques Chirac, who is concerned that a prolonged crisis could damage Franco-German relations. “The Franco-German relationship has to be preserved at any price,” said a person on the French side. The state has 15 per cent of EADS, but is barred by a shareholders’ agreement from any involvement in management issues.

DaimlerChrysler and Lagardère, EADS’s two core industrial shareholders, have been wrangling over changes to the Franco-German group for two weeks, ever since the company announced a delay to the flagship Airbus A380 jumbo airliner project.

It is thought that the two sides have now reached a preliminary understanding on the departure of Noël Forgeard, the French co-chief executive who is also chairman of Airbus. Mr Forgeard is under fire for the delays at Airbus, and for controversial share sales in the weeks before the problems first emerged.

The share sales by Mr Forgeard and six other EADS directors, as well as Lagardère and Daimler, are being investigated by stock market authorities in France and Germany.

Until recent days, it was thought that Lagardère had been reluctant to sanction Mr Forgeard’s immediate departure, fearing this could reflect badly on its own decision to sell shares in April. The parties are understood to be negotiating a face-saving solution for the feisty EADS boss, who has been battling to preserve his job.

A leaked account of an audit committee meeting in May showed that he had raised serious questions over the extent of the delays to the A380 a month before the profit warning.

In addition, the two sides were on Friday still trying to choose between two management scenarios.

DaimlerChrysler is understood to favour abandoning the group’s dual Franco-
German structure, which calls for co-chairmen and co-chief executives of each nationality.

Under this plan, both Arnaud Lagardère, who represents French interests on the EADS board, and Manfred Bischoff, for DaimlerChrysler, would step down as co-chairman. Louis Gallois, the civil servant brought in to revive the French state rail group SNCF, has been mooted as sole non-executive chairman. Tom Enders, currently German co-chief executive, would be the sole chief executive.

However Mr Lagardère is fiercely resisting this plan, arguing there is no reason for him to give up his EADS seat.

If Lagardère maintains its resistance, the group will keep the dual structure.

In this case Mr Lagardère and Mr Bischoff would stay, but Mr Forgeard would be replaced. Mr Gallois is again the Germans’ favourite for the post, but he would have to give up his executive chairmanship of SNCF for a co-chief executive job.

Neither of these scenarios solves the problem of who will run Airbus. Gustav Humbert, the German chief executive appointed 18 months ago, is also likely to go and should be replaced by a French executive. The most obvious candidates to replace him – Fabrice Bregier of EADS’s Eurocopter division, or Jean-Paul Gut, EADS marketing director, both exercised their shares at the same time as Mr Forgeard, which will cast a cloud over their appointment.

While the most likely outcome was hard to determine on Friday, some expect that a clearer indication will come on Sunday evening. That is when Thierry Breton, the French finance minister charged by President Chirac to find a solution for Europe’s flagship industrial project, will be interviewed on Europe 1 radio. If only to pre-empt this vociferous minister, the two sides may hasten their decision.

Additional reporting by James Mackintosh

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