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)


Japan, South Korea plan to resume Iran oil imports from January

Updated 9 min 22 sec ago
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Japan, South Korea plan to resume Iran oil imports from January

  • Japan and South Korea were among the countries issued with a waiver from the US, after it reinstated sanctions on Iran
  • Both countries temporarily halted Iranian oil loading around mid-September

TOKYO/SEOUL: Refiners in Japan and South Korea are looking to resume Iranian oil imports from January after receiving waivers from US sanctions on Tehran, sources familiar with the matter said.
The unexpected resurgence in Iranian oil imports due to the waivers has helped push spot prices for Middle East crude and condensate to their lowest in more than a year.
The United States in November granted exemptions to eight countries, allowing them to import some Iranian crude for another 180 days. Japan and South Korea were among the top five buyers of Iranian crude and condensate before they stopped imports in the third quarter ahead of the sanctions.
South Korean refiners are set to hold their Iranian oil imports at zero until the end of the year, and they may resume shipments in late January or early February as buyers are in talks with Iran to sign new contracts, industry sources said.
“They are seeking to get the best price and are in talks with Iran,” said a source with direct knowledge of the matter.
Most tankers are booked until December, so South Korea may load Iran oil shipments in January at the earliest, he said.
It takes about 25 days for oil shipments from Iran to arrive at South Korea. Iran also has the option of selling oil from storage in Dalian, China, which would shorten delivery time.
Last week, a South Korean delegation was in Iran to negotiate for 2019 supplies of mainly South Pars condensate.
“There are some issues to be cleared like payment. We are not able to buy it at the moment and are not rushing,” a second source said. “Iran is also trying not to sell it cheaper. We ... won’t import Iran oil until perhaps after January.”
The sources declined to be named due to the sensitivity of the matter.
Japan
Fuji Oil Co, one of Japan’s top Iranian oil buyers, plans to resume Iran crude liftings from January as well, and is also looking to buy condensate.
Fuji Oil was considering whether to sign a new contract for Iranian crude, its top executive said last week, adding that oil from Iran is competitively priced against rival grades.
Japan’s largest refiner, JXTG Holdings, said earlier this month it may resume Iranian oil loadings from December.
But while Japanese buyers are likely to buy Iranian oil through February loadings, they may not take the crude from March onwards, as they wait for the government to extend sovereign ship insurance into the new financial year that starts on April 1, industry sources familiar with the matter said.
Started in 2012 to counter sanctions on Iranian oil, Japan’s sovereign insurance scheme covers any shortfalls from Protection & Indemnity (P&I) insurance for ships carrying crude from Iran to Japan.
The Japanese government has declined to give information on the volumes of Iranian imports that would be allowed under the 180-day exemption period.
Some sources said the sanctions waiver may allow Japan to buy around 100,000 barrels per day (bpd) of Iranian oil. That marks a significant reduction for buyers that took about 165,000 bpd of Iranian oil in January-September.
Japan joined South Korea in temporarily halting Iranian oil loading around mid-September.