Last checked at 1 Mar 2016 07:00
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
AIRBUS AIRCRAFT PURCHASE AGREEMENT
On 29 February 2016, the Company and AIE entered into the Airbus Aircraft Purchase Agreement with Airbus Company to purchase the New Airbus Aircraft.
The highest applicable percentage ratio under Rule 14.07 of the Listing Rules for the Airbus Aircraft Purchase is above 5% but less than 25%. Therefore, the Airbus Aircraft Purchase constitutes a discloseable transaction of the Company under the Listing Rules.
AIRBUS AIRCRAFT PURCHASE AGREEMENT
Date:
29 February 2016 (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) Airbus Company, as the vendor, one of whose principal business activity is aircraft manufacturing.
To the best of the Directors' knowledge, information and belief, having made all reasonable enquiries, Airbus Company 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:
The New Airbus Aircraft, being 12 Airbus model A330-300 aircraft.
Consideration:
The aircraft basic price comprises the airframe price, optional features price and engine price. The aircraft basic price of the New Airbus Aircraft to be acquired by the Company in aggregate is
approximately US$2,927 million (equivalent to approximately HK$22,757 million) (price quoted
from open market as at January 2013). The aircraft price is subject to price adjustment by applying a formula. Airbus Company has granted to the Company significant price concessions with regard to the New Airbus Aircraft. These concessions will take the form of credit memoranda which may be used by the Company towards the final price payment of the New Airbus Aircraft or may be used for the purpose of purchasing goods and services from Airbus Company. Such credit memoranda were determined after arm's length negotiations between the parties and as a result, the actual consideration for the New Airbus Aircraft to be acquired by the Company is lower than the aircraft basic price mentioned above.
The Airbus Aircraft Purchase was negotiated and entered into in accordance with customary business practice. The Directors confirm that the extent of the price concessions granted to the Company in the Airbus 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 as set out in the announcement of the Company dated 24 May 2013. The Company believes that there is no material impact of the price concessions obtained in the Airbus 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 basic price, instead of the actual price, for aircraft acquisitions. Disclosure of the actual consideration will result in the loss of the significant price concessions and hence a significant negative impact on the Group's cost for the Airbus 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 Airbus Aircraft.
Payment and delivery terms:
The aggregate consideration for the Airbus Aircraft Purchase is payable by cash in instalments. The Company is expecting to take delivery of the New Airbus Aircraft in stages from 2016 to 2018.
Source of funding:
The Airbus Aircraft Purchase will be funded through cash generated from the Company's business operations, commercial bank loans and other financing instruments of the Company. The Airbus Aircraft Purchase is expected to have no material impact on the cash flow and operation of the Group.
REASONS FOR AND BENEFITS OF THE AIRBUS AIRCRAFT PURCHASE
The Transactions will expand the overall fleet capacity of the Group and optimize its fleet structure. 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 aging of the fleet, the Airbus Aircraft Purchase will strengthen the fleet capacity of the Group with an increase of approximately 5.6%, based on the number of available tonne kilometers of the Group as at 31 December 2015. The Company expects the New Airbus Aircraft will deliver more cost efficient performance and provide more comfortable services to its passengers.
The Directors believe that the terms of the Airbus 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 Airbus Aircraft Purchase is above 5% but less than 25%. Therefore, the Airbus 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:
"AIE" | Air China Import and Export Co., Ltd. (國航進出口有限公司), a company incorporated in the PRC with limited liability and a wholly-owned subsidiary of the Company |
"Airbus Aircraft Purchase" | the purchase by the Company of the New Airbus Aircraft pursuant to the Airbus Aircraft Purchase Agreement |
"Airbus Aircraft Purchase Agreement" | the aircraft purchase agreement dated 29 February 2016 and entered into by the Company, AIE and Airbus Company, pursuant to which the Company has agreed to purchase the New Airbus Aircraft from Airbus Company |
"Airbus Company" | Airbus S.A.S., a company incorporated in Toulouse, France |
"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 |
"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 Airbus Aircraft" | 12 Airbus model A330-300 aircraft to be purchased by the Company pursuant to the Airbus 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
Rao Xinyu Tam Shuit Mui
Joint Company Secretaries
Beijing, the PRC, 29 February 2016
As at the date of this notice, the directors of the Company are Mr. Cai Jianjiang, Ms. Wang Yinxiang, Mr. Cao Jianxiong, Mr. Feng Gang, Mr. John Robert Slosar, Mr. Ian Sai Cheung Shiu, Mr. Song Zhiyong, Mr. Fan Cheng, Mr. Pan Xiaojiang*, Mr. Simon To Chi Keung*, Mr. Stanley Hui Honchung* and Mr. Li Dajin*.
* Independent non-executive Director of the Company