Airbus faces A330 delivery delays amid HNA Group woes — Reuters sources

This photo taken on July 10, 2018 shows the new Airbus A220-300 parked on the tarmac on July 10, 2018 at the Airbus delivery center, in Colomiers southwestern France. (AFP / PASCAL PAVANI)
Updated 12 July 2018
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Airbus faces A330 delivery delays amid HNA Group woes — Reuters sources

  • Companies belonging to the troubled Chinese aviation-to-finance conglomerate have delayed payments for several months, leading Airbus to withdraw deliveries, the sources told Reuters.
  • “After six months of talks, Airbus took the decision to withdraw the planes as it does not want to play the financier,” said a person familiar with the discussions.

TOULOUSE, France: Airbus faces a logjam of undelivered A330 jets worth well over $1 billion for airlines affiliated to China’s debt-laden HNA Group following a stand-off over late payments, according to industry sources and a Reuters examination of parked aircraft.
Companies belonging to the troubled Chinese aviation-to-finance conglomerate have delayed payments for several months, leading Airbus to withdraw deliveries rather than step in to finance the aircraft itself, the sources told Reuters.
“After six months of talks, Airbus took the decision to withdraw the planes as it does not want to play the financier,” said a person familiar with the discussions on Wednesday.
However, another person involved in the matter cautioned: “It is in the process of being resolved.”
An Airbus spokesman said: “We keep our talks and contractual terms with customers confidential.”
HNA had no immediate comment.
The cluster of undelivered A330 aircraft came to light on the sidelines of a ceremony to present Airbus’s smallest new jet.
Reuters journalists counted five A330s dotted around the delivery center and another parked further away — some with reflective sunshade protectors taped to the cockpit windows and all painted in the flame-red liveries of HNA Group airlines.
These include Hainan Airlines, Beijing Capital Airlines and Tianjin Airlines.
Six A330s would cost a total of $1.6 billion at list prices.

Turbulence
Various semi-finished A320s could be seen parked, though it was impossible to tell whether these were grounded for the same reasons or because of a wider problem of engine shortages for such planes. Airbus has had a stockpile of up to 100 undelivered single-aisle jets, but said last week this had fallen to 86.
The wide-body A330 aircraft has no such engine supply problems and it is the backlog of those more expensive planes that is causing most concern, the sources said.
An aircraft finance source estimated the total financial burden of holding such an asset, in terms of lost value and the cost of storage and maintenance, at $10,000 per plane per day.
Airbus is already having to handle cash shortfalls from the late delivery of dozens of A320 aircraft.
Unraveling the situation could be made more difficult by the death last week of HNA Group chairman Wang Jian, a financial source said, though HNA quickly named co-founder Chen Feng as sole chairman of the highly centralized group.
Wang, regarded as the architect of HNA’s $50 billion acquisition spree that pushed it into debt, died in southern France on July 3 in what local police said appeared to be an accidental fall from a wall while posing for a photograph.
His death complicates the troubled conglomerate’s efforts to restructure and pay off borrowings, and could increase pressure on HNA to reveal more about its oft-criticized opaque ownership.
“Anything like this creates turbulence, so things are difficult with HNA,” the financial source said. Another industry source stressed Chen was nonetheless a heavyweight figure.
Financial sources said earlier this year that some airlines linked to HNA were delaying aircraft lease payments to lessors.
Some of the sources said HNA’s flagship Hainan Airlines and smaller ones including Lucky Air and Beijing Capital Airlines had missed payments, while Tianjin Airlines was seeking to extend the term for payments due this year. (Reporting by Tim Hepher; Editing by Mark Potter)


Britain unveils “short and sharper” code for companies

Updated 2 min 46 sec ago
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Britain unveils “short and sharper” code for companies

LONDON: Companies in Britain must strive to rein in excessive executive pay and make boards more diverse under a new “short and sharper” corporate code, published on Monday.
The Financial Reporting Council (FRC) has updated its code of corporate standards for publicly listed companies, which must comply with it or explain to shareholders if they do not.
The new code comes as the watchdog, which oversees company governance standards and accountants, faces a review to see if it can uphold high corporate standards to maintain Britain’s attractions as a place to invest after Brexit.
British lawmakers have called for tougher corporate govenance standards following a row between food retailer Tesco and its suppliers and the collapse of retailer BHS and outsourcer Carillion. And shareholders have become much more active in terms of rejecting some executive pay deals.
“To make sure the UK moves with the times, the new code considers economic and social issues and will help to guide the long-term success of UK businesses,” FRC Chairman Win Bischoff said.
“This new code, in its short and sharper form, and with its overarching theme of trust, is paramount in promoting transparency and integrity in business for society as a whole.”
There is a new provision for greater board engagement with the workforce to understand their views — aimed at reinforcing an existing provision in law since 2006 which has had a patchy impact.
This, along with a requiremnent to have “whistleblowing” mechanisms that allow directors and staff to raise concerns for effective investigation, mark the biggest broadening of corporate standards in many years, the FRC said.
“The new code is much stronger on abilities to raise concerns in confidence,” said David Styles, FRC director of corporate governance.
It also emphasises the need for boards to refresh themselves, become diverse and plan properly for replacing top jobs.
It introduces a requirement for companies to explain publicly if a board chair has remain unchanged for more than nine years.
Company remuneration committees should also take into account workforce pay when setting director pay.
“To address public concern over executive remuneration... formulaic calculations of performance-related pay should be rejected,” the watchdog said.