TIDMAIRC
RNS Number : 8376S
Air China Ld
19 March 2021
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 AIRCRAFT
AIRCRAFT PURCHASE AGREEMENT
On 18 March 2021, the Company and AIE entered into the Aircraft
Purchase Agreement with AFS Investments to purchase the New
Aircraft.
The highest applicable percentage ratio under Rule 14.07 of the
Listing Rules for the Aircraft Purchase is above 5% but less than
25%. Therefore, the Aircraft Purchase constitutes a discloseable
transaction of the Company under the Listing Rules.
Date:
18 March 2021 (after trading hours)
Parties:
(a) the Company, as the purchaser, the principal business
activity of which is air passenger, air cargo and
airline-related services;
(b) AIE, as the import agent for the Company; and
(c) AFS Investments, as the vendor, a special purpose company
for ownership of aircraft which is a wholly-owned subsidiary of
GECAS. The principal business activity of GECAS is aviation finance
services.
As of the date of this announcement, the ultimate beneficial
owner of GECAS is General Electric
Company, a company listed on the New York Stock Exchange (stock
code: GE).
To the best of the Directors' knowledge, information and belief,
having made all reasonable enquiries,
AFS Investments, GECAS and their ultimate beneficial owner are
third parties independent of the Company
and of connected persons (as defined under the Listing Rules) of
the Company.
Aircraft to be acquired:
The new aircraft to be acquired under the Aircraft Purchase
Agreement comprise five Airbus A320- 200N aircraft and 13 Airbus
A321-200NX aircraft.
Consideration:
The aircraft list price comprises the airframe price, optional
features price and engine price.
The aircraft list price of the New Aircraft is approximately
US$2,236.5 million (equivalent to approximately HK$17,355.2 million
at an exchange rate of US$1 = HK$7.76) (price quoted from open
market as at January 2018). With regard to the Aircraft Purchase,
AFS Investments and GECAS have offered to the Company discount
which was determined after arm's length negotiations between the
parties and, as a result, the Company purchases the New Aircraft at
a price which is lower than the aircraft list price mentioned
above.
The Aircraft Purchase was negotiated and entered into in
accordance with customary business practice. The Company, as the
purchaser, is subject to a strict confidentiality obligations under
which no disclosure with respect to the terms and conditions of the
Aircraft Purchase Agreement shall be made. For the Company's
compliance with its disclosure obligations normally required under
Chapter 14 of the Listing Rules, the Company has obtained consent
from AFS Investments and GECAS to disclose certain terms of the
Aircraft Purchase Agreement none of which relate to the actual
consideration for the Aircraft Purchase under the Aircraft Purchase
Agreement. The actual consideration for the Aircraft Purchase is to
remain commercial in confidence for the purposes of determination
by AFS Investments and GECAS in relation to the amount of discount
to be offered to the Company. Such disclosure would be prejudicial
to the Company's ability to negotiate and enter into the Aircraft
Purchase. The Directors confirm that the extent of the discount
obtained by the Company for the Aircraft Purchase is comparable
with the price concessions that the Company had obtained in the
previous aircraft purchase entered into between the Company and
Airbus Company. The Company believes that there is no material
impact of the discounted price obtained in the Aircraft Purchase on
the unit operating cost of the Group's fleet. It is normal business
practice of the global airline industry to disclose the aircraft
list price, instead of the actual consideration, for aircraft
acquisitions. Disclosure of the actual consideration will result in
the loss of the significant discount and hence a significant
negative impact on the Group's cost for the Aircraft Purchase and
will therefore not be in the interest of the Company and the
Shareholders as a whole.
The Company has applied to the Stock Exchange for a waiver from
strict compliance of Rule 14.58(4) of the Listing Rules in respect
of disclosure of the actual consideration of the New Aircraft.
Payment and delivery terms:
The aggregate consideration for the Aircraft Purchase is payable
by cash in instalments. The Company is expecting to take delivery
of the New Aircraft upon the delivery of the New Aircraft from
Airbus Company to AFS Investments before 2022.
Source of funding:
The Aircraft Purchase will be funded through self-owned cash,
commercial bank loans and other financing instruments of the
Company. The Aircraft Purchase is expected to have no material
impact on the cash flow and operation of the Company.
REASONS FOR AND BENEFITS OF THE AIRCRAFT PURCHASE
As an aircraft leasing company, GECAS has a long-term business
relationship with the Company. With an aircraft buyout proposal,
GECAS responded to the inquiry from the Company on introducing a
bunch of new Airbus A320-200N and Airbus A321-200NX aircraft.
Considering the quoted price and comprehensive cost are
competitive, the Company decided to purchase the New Aircraft from
GECAS.
Since the normalization of prevention and control of the
COVID-19 pandemic, the recovery of domestic air transport market is
better than that of the international market, and the utilization
of narrow-body aircraft in the domestic market has also recovered
to some extent. The Aircraft Purchase will supplement the long-term
fleet capacity of the Company in Beijing and Chengdu under the
pattern of "one city two airports". Further, the delivery of New
Aircraft from AFS Investments to the Company will meet the needs of
the Company for its growth in fleet capacity for the coming year as
the New Aircraft is expected to be delivered from Airbus Company to
AFS Investments before 2022.
Considering that the exchange rate of the US dollar against RMB
and the financing interest rate are at a relatively historically
low level, the Aircraft Purchase will enable the Company to control
its procurement cost, which is in the interests of the Company and
the Shareholders as a whole. The Aircraft Purchase will strengthen
the fleet capacity of the Company. The fleet capacity of the Group
will increase by approximately 2.12%, based on the number of
available tonne kilometers of the Group as at 31 December 2020
without taking into account the adjustments as a result of aircraft
withdrawal due to market condition and aircraft aging. The Group
expects that the Aircraft Purchase will deliver improved fleet
capacity at competitive operating costs whilst providing high
standards of passenger comfort and safety.
The Directors believe that the Aircraft Purchase is conducted in
the ordinary and usual course of business of the Group on normal
commercial terms and the terms of the Aircraft Purchase are fair
and reasonable and in the interests of the Company and the
Shareholders as a whole.
LISTING RULES IMPLICATIONS
The highest applicable percentage ratio under Rule 14.07 of the
Listing Rules for the Aircraft Purchase is above 5% but less than
25%. Therefore, the 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:
"AFS Investments" AFS Investments I, Inc., a wholly-owned
subsidiary of GECAS
"AIE" Air China Import and Export Co., Ltd. (
), a company incorporated in the PRC with
limited liability and a wholly-owned subsidiary
of the Company
"Airbus Company" Airbus S.A.S., a company incorporated in
Toulouse, France
"Aircraft Purchase" the purchase by the Company of the New
Aircraft pursuant to the
Aircraft Purchase Agreement
"Aircraft Purchase Agreement" the aircraft purchase agreement dated 18
March 2021 and entered into by the Company,
AIE and AFS Investments, pursuant to which
the Company has agreed to purchase the
New Aircraft from AFS Investments
"Board" the board of directors of the Company
"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
"GECAS" GE Capital Aviation Services Limited, a
company incorporated under the laws of
Ireland, an independent third party to
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
"New Aircraft" five new Airbus A320-200N aircraft and
13 new Airbus A321-200NX aircraft to be
purchased by the Company pursuant to the
Aircraft Purchase Agreement
"PRC" the People's Republic of China, excluding,
for the purpose of this announcement only,
Hong Kong, Macau and Taiwan
"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
Company Secretary
Beijing, the PRC, 18 March 2021
As at the date of this announcement, the directors of the
Company are Mr. Song Zhiyong, Mr. Feng Gang,
Mr. Patrick Healy, Mr. Xue Yasong, Mr. Duan Hongyi*, Mr. Stanley
Hui Hon-chung* and Mr. Li Dajin*.
* Independent non-executive director of the Company
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