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Pandemic jet deals in spotlight as Airbus axes Russia delivery

In the final hours of 2021 Airbus officially delivered two A350s to Russia’s Aeroflot, helping the jet maker meet annual delivery targets. Months later, the jets remain in French storage limbo after sanctions forced Airbus to abandon physical handover.

The setback sheds new light on workarounds used by the European plane maker under prevailing accounting rules to support deliveries during the pandemic, as well as the scramble to hit targets at the close of each year, industry sources said.

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Airbus reached delivery targets during the crisis, in part due to auditor-approved deals that allowed carriers to delay accounting for some new planes on certain conditions.

The use of such acceptance and delivery agreements (ADA) to smooth deliveries was revealed by Reuters in July.

Industry sources say the system was used for as many as 10-15 percent of deliveries at the height of the pandemic as the world’s largest plane maker fought to contain a drop in deliveries at a time of severe shock for the industry.

But the arrangement has fallen under the spotlight after sanctions against Russia interrupted the choreographed handover sequence. Airbus declined to comment on contractual details or on whether other ADA deals may be disrupted.

Even in ordinary times, a delivery spans 4-5 days of tests and paperwork, according to a recent Airbus filing. Last on the list before jets fly away is “Transfer of Title” or ownership.

Under the ADA agreements, the process can stretch out for months after deliveries are announced, the sources said.

Airlines must pay everything owed except for a token four-figure sum on a $50-150 million jet – enough to ring up a sale and record a delivery for Airbus auditors, but just short of the final tally needed to hand formal ownership to the airline.

The advantage for Airbus is that it is able to book the revenue due on delivery, while the airline can delay taking the jet for 3-6 months and pause costly charges like depreciation.

Sanctions impact

Airbus’ auditors agreed during the crisis to book such transactions as revenue-earning deliveries strictly on the basis that there is an “irrevocable commitment” to transfer ownership at a specific date, three people familiar with the system said.

In the case of the two Aeroflot jets, war in Ukraine and swift European sanctions against Russia fell in the middle of this sequence, cutting away the certainty required by auditors.

On Friday, Airbus took the rare step of reversing the two deliveries that contributed to forecast-beating 2021 results and put aside money to be refunded whenever sanctions allow. The jets, stored in central France, are back on sale.

Some see the U-turn as a potential turning point as aviation switches focus from urgent crisis management towards recovery.

“With what happened to Aeroflot, auditors might start looking at the ADA process differently,” an airline source said.

An Airbus spokesperson said any policies were a matter for auditors EY, whose UK-based global office had no immediate comment. EY typically does not discuss individual cases. Airbus is due to hold its annual shareholder meeting later on Tuesday.

The episode also highlights longstanding internal pressure to avoid deliveries being skewed towards the end of the year.

While most Western businesses wind down on New Year’s Eve, Airbus works flat-out to meet annual delivery targets after a summer break. That included Aeroflot’s A350s booked on December 31.

The chronic end-year pattern was already under internal review after Airbus signed a $175,000-a-day compensation clause to secure an A350 delivery to Qatar Airways exactly a year earlier on December 31, 2020, reflecting flaws on a separate jet.

The agreement unlocked a crucial delivery as one year ended, but now stands at the center of a $1-billion compensation battle with the airline over 23 jets with similar flaws.

The two sides disagree whether the clause applies but the potential impact of the last-minute deal could speed changes in the way end-year deliveries are managed, industry sources said.

The Airbus spokesperson said deliveries are agreed with customers, and peaks and troughs are normal throughout the year.

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US: Bodies of two of three missing kids found in Minnesota lake

The bodies of two young children have been recovered from a Minnesota lake, and searchers are still looking for a third they fear may have been intentionally drowned.

Meanwhile, the father of the children died at a different location hours earlier, and their mother is missing. Names have not been released.

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The chain of events began Friday morning when the father was found dead at a mobile home park in the town of Maplewood, near Minneapolis. Police determined that the woman had left with the children, and a search began.

Maplewood Police Lt. Joe Steiner said the woman’s car was found near Vadnais Lake around 4 p.m. Friday. The shoes of the children were found on the shore.

A search of the lake found one child’s body Friday evening. A second body was found overnight. Searchers from several organizations were busy Saturday looking for the third, as well as the mother.

Authorities believe all three children were under the age of 5.

“There’s nothing more tragic than the loss of young children,” Ramsey County Sheriff Bob Fletcher said at a news conference on Friday. He called the deaths a “likely triple homicide.”

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Foreign firefighters arrive in Greece for summer wildfire season

Several dozen Romanian and Bulgarian firefighters took up their posts in Greece on Saturday, the first members of a European force being deployed to the country to provide backup in case of major wildfires during the summer.

More than 200 firefighters and equipment from Bulgaria, France, Germany, Romania, Norway and Finland will be on standby during the hottest months of July and August in Greece, where a spate of wildfires caused devastation last summer.

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A group of 28 Romanian firefighters with eight vehicles, and 16 firefighters from Bulgaria with four vehicles, were the first to arrive for the two-month mission, financed and coordinated under the European Union’s civil protection mechanism.

“We thank you very much for coming to help us during a difficult summer for our country, and for proving that European solidarity is not just theoretical, it’s real,” Greek Civil Protection Minister Christos Stylianides said on Saturday as he welcomed the members of the Romanian mission in Athens.

“When things get tough, you will be side by side with our Greek firefighters so we can save lives and property.”

The Bulgarian firefighters have been stationed in Larissa, in central Greece.

Last summer’s wildfires ravaged about 300,000 acres (121,000 hectares) of forest and bushland in different parts of Greece as the country experienced its worst heatwave in 30 years.

Following sharp criticism of its response to the fires, the Greek government set up a new civil protection ministry and promised to boost firefighting capacities.

In Greece’s worst wildfire disaster, 102 people were killed when a blaze tore through the seaside town of Mati and nearby areas close to Athens during the summer of 2018.

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One killed, six injured in shootout between migrant groups in Serbia

One migrant was killed and at least six others, including a teenage girl, were injured Saturday in a shootout between migrant groups in Serbia near the Hungarian border, the state-run RTS television reported.

The 16-year-old girl sustained life threatening injuries in the incident that occurred in a forest in the outskirts of Subotica, some 160 kilometers (100 miles) north of Belgrade, where the injured were hospitalized, RTS reported.

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Police, who made no immediate comment, blocked access to the forest where the incident took place, only around a kilometer from the Hungarian border.

Interior Minister Aleksandar Vulin rushed to the scene.

The injured, aged between 20 and 30, have no documents, Subotica mayor Stevan Bakic told local media.

It is not known what triggered the incident, he added.

Local media reported that the shootout occurred between Afghan and Pakistani migrants most likely over human trafficking from the area to European Union member Hungary.

Serbia lies on the so-called Balkans route used by migrants heading towards Western Europe as they flee war and poverty in the Middle East, Asia and Africa.

Although the route is nowhere as busy as it was during Europe’s migrant crisis in 2015, tens of thousands of illegal migrants still cross the region annually.

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