TIDMAIRC
RNS Number : 8098K
Air China Ld
02 September 2019
Hong Kong Exchanges and Clearing Limited and The Stock Exchange
of Hong Kong Limited take no responsibility for the contents of
this announcement, make no representation as to its accuracy or
completeness and expressly disclaim any liability whatsoever for
any loss howsoever arising from or in reliance upon the whole or
any part of the contents of this announcement.
AIR CHINA LIMITED
(a joint stock limited company incorporated in the People's
Republic of China with limited liability)
(Stock Code: 00753)
DISCLOSEABLE TRANSACTION PURCHASE OF DOMESTIC AIRCRAFT
COMAC AIRCRAFT PURCHASE AGREEMENT
On 30 August 2019, the Company entered into the COMAC Aircraft Purchase Agreement
with COMAC to purchase the COMAC Aircraft.
The highest applicable percentage ratio under Rule 14.07 of the Listing Rules
for the COMAC Aircraft Purchase is above 5% but less than 25%. Therefore,
the COMAC Aircraft Purchase constitutes a discloseable transaction of the
Company under the Listing Rules.
COMAC AIRCRAFT PURCHASE AGREEMENT
Date:
30 August 2019 (after trading hours)
Parties:
(a) the Company, as the purchaser, the principal business
activities of which are air passenger, air cargo and
airline-related services;
(b) COMAC, as the vendor, one of whose principal business
activities is aircraft manufacturing.
To the best of the Directors' knowledge, information and belief,
having made all reasonable enquiries, COMAC and each of its
ultimate beneficial owners are third parties independent of the
Company and its connected persons (as defined under the Listing
Rules).
Aircraft to be acquired:
35 ARJ21-700 aircraft.
Consideration:
The basic price of each aircraft comprises the airframe price
and engine price. The basic price of the COMAC Aircraft in
aggregate is approximately US$1.33 billion (equivalent to
approximately HK$10,374 million at an exchange rate of US$1 =
HK$7.80) (price quoted from open market as at January 2019). COMAC
has granted to the Company considerable price concessions with
regard to the COMAC Aircraft. These concessions will take the form
of credit which may be used by the Company towards the final price
payment of the COMAC Aircraft or may be used for the purpose of
purchasing relevant goods and services. Such credit was determined
after arm's length negotiations between the parties and as a
result, the actual consideration for the COMAC Aircraft to be
acquired
by the Company is lower than the aircraft basic price mentioned
above. As it is the first time that the Company purchases aircraft
from COMAC, there is no price concessions previously obtained by
the Company from COMAC available for comparison. As the aircraft
model, specification, performance and maximal total range of COMAC
Aircraft differ from the aircraft that the Company has purchased
from other aircraft manufacturers, the price concessions provided
under this transaction cannot be directly comparable to those
obtained by the Company from other aircraft manufacturers in
previous aircraft acquisitions. Solely based on the price
concession rate granted to the Company, the price concession rate
under COMAC Aircraft Purchase is comparable to those obtained
by the Company from other aircraft manufacturers in previous aircraft acquisitions.
The COMAC Aircraft Purchase Agreement was negotiated and entered
into in accordance with customary business practice. The Company
believes that there is no material impact of the price concessions
obtained in the COMAC Aircraft Purchase on the unit operating cost
of the Company's fleet. It is normal business practice of the
global airline industry to disclose the aircraft basic price,
instead of the actual price, for aircraft acquisitions. Disclosure
of the actual consideration will result in the loss of the
considerable price concessions and hence a significant negative
impact on the Group's cost for the COMAC Aircraft Purchase and will
therefore not be in the interests of the Company and the
Shareholders as a whole. The Company has applied to the Stock
Exchange for a waiver from strict compliance with Rule 14.58(4) of
the Listing Rules in respect of disclosure of the actual
consideration of the COMAC Aircraft.
Payment and delivery terms:
The consideration for the COMAC Aircraft Purchase will be
denominated in US dollars and paid in Renminbi by cash in
instalments. The COMAC Aircraft are planned to be delivered in
stages from 2020 to 2024.
Source of funding:
The COMAC Aircraft Purchase will be funded through the Company's
own fund, commercial bank loans or other financing methods. The
Company expects that the COMAC Aircraft Purchase will have no
material impact on the cash flow position or business operation of
the Company.
REASONS FOR AND BENEFITS OF THE COMAC AIRCRAFT PURCHASE
The COMAC Aircraft Purchase will expand the fleet capacity of
the Group, facilitate the supplement of aircraft capacity for
regional routes, promote the effective connection of the Company's
main routes and regional routes, further improve the Company's
overall route network layout, enhance market competitiveness, and
meet the needs of mass air travel of passengers.
The Directors believe that the terms of the COMAC Aircraft
Purchase are fair and reasonable and in the interests of the
Company and the Shareholders as a whole.
THE APPROVAL PROCEDURE OF THE COMAC AIRCRAFT PURCHASE
The COMAC Aircraft Purchase has been approved at the fifteenth
meeting of the fifth session of the Board of the Company and is
subject to the filing with relevant government authorities.
If not taking into account the adjustments that may be made to
the fleet (including the disposal of used aircraft) based on
marketing condition and the aging of the fleet, the transaction
will strengthen the fleet capacity of the Group with an increase of
approximately 1.08%, based on the number of available tonne
kilometers of the Group as at 31 December 2018.
LISTING RULES IMPLICATIONS
The highest applicable percentage ratio under Rule 14.07 of the
Listing Rules for the COMAC Aircraft Purchase is above 5% but less
than 25%. Therefore, the COMAC Aircraft Purchase constitutes a
discloseable transaction of the Company under the Listing
Rules.
DEFINITIONS
In this announcement, unless the context otherwise requires, the
following expressions shall have the following respective
meanings:
"Board" the board of directors of the Company
"COMAC Aircraft Purchase Agreement" the agreement dated 30 August 2019 and entered
into by the Company and COMAC, pursuant to which
the Company has agreed to purchase the COMAC Aircraft
from COMAC
"COMAC Aircraft Purchase" the purchase by the Company of the COMAC Aircraft
pursuant to the COMAC Aircraft Purchase Agreement
"COMAC Aircraft" the 35 ARJ21-700 aircraft to be purchased by the
Company pursuant to the COMAC Aircraft Purchase
Agreement
"COMAC" The Commercial Aircraft Corporation of China, Ltd.,
a company incorporated in Shanghai, the PRC
"Company" Air China Limited, a company incorporated in the
PRC, whose H shares are listed on the Stock Exchange
as its primary listing venue and on the Official
List of the UK Listing Authority as its secondary
listing venue, and whose A shares are listed on
the Shanghai Stock Exchange
"Director(s)" the director(s) of the Company
"Group" the Company and its subsidiaries
"HK$" Hong Kong dollars, the lawful currency of Hong
Kong
"Hong Kong" Hong Kong Special Administrative Region of the
PRC
"Listing Rules" the Rules Governing the Listing of Securities on
The Stock Exchange of Hong Kong Limited
"Shareholders" the shareholders of the Company
"Stock Exchange" The Stock Exchange of Hong Kong Limited
"US$" United States dollars, the lawful currency of the
United States
By order of the Board
Air China Limited
Zhou Feng Tam Shuit Mui
Joint Company Secretaries
Beijing, the PRC, 30 August 2019
As at the date of this announcement, the directors of the
Company are Mr. Cai Jianjiang, Mr. Song Zhiyong, Mr. Cao Jianxiong,
Mr. Xue Yasong, Mr. John Robert Slosar, Mr. Wang Xiaokang*, Mr. Liu
Deheng*, Mr. Stanley Hui Hon-chung* and Mr. Li Dajin*.
* Independent non-executive director of the Company
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END
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