The Wall Street Journal - 03.09.2019

B2| Tuesday, September 3, 2019 THE WALL STREET JOURNAL.

guing an IPO could expose the company to unwanted scrutiny and potential legal jeopardy, the Journal has reported. Mr. Falih’s removal “shows the seriousness of the Aramco listing” this time around, said Helima Croft, chief commodi- ties strategist at Canadian bank RBC. Prince Mohammed

more cautious about the pros- pects of an IPO. He tried to dissuade Prince Mohammed in 2016 from any plan to list shares of the company. While he lost that argument, the large Saudi energy bureaucracy that sits under Mr. Falih succeeded in slowing the march toward a listing by ar-

INDEX TO BUSINESSES

These indexes cite notable references to most parent companies and businesspeople in today’s edition. Articles on regional page inserts aren’t cited in these indexes.

A Alphabet......................B4 Altria Group..............B10 Amazon.com...............B4 Andreessen Horowitz.B5 Apple...........................B4 B Banco Santander........B2 Bank of Jinzhou..........B1 Boeing.........................B1 Boyd Gaming..............A2 C Caesars Entertainment..........A2 China National Tobacco ..................B10 China Tobacco International (HK)..B10 Comcast.......................B1 Commercial Vehicle Group.........................B3 D, E

DraftKings...................A2 East Manufacturing....B3 Eaton...........................B3 Ernst & Young.............B2 Eversec Technology....B9 F Facebook................B4,B5 FanDuel.......................A2 G Goldman Sachs Group.......................B10 H Huawei Technologies.A6 I Industrial & Commercial Bank of China.....................B2 K Kashable......................B5 Kottke Trucking..........B3 M

M.C. Van Kampen Trucking....................B3 N Navistar InternationalB3 Nazareth Home...........B1 Nomura Holdings........B2 P Paccar..........................B3 PayActiv......................B1 Perfect Transportation..........B3 Philip Morris International...........B10 S Saudi Aramco..............B1 Spotify Technology.....B2 U Uber Technologies......B5 V Vivendi........................B2 W Walmart.................B1,B5

INDEX TO PEOPLE

Gerard Butler, left, and Morgan Freeman in ‘Angel Has Fallen.’

JACK ENGLISH/LIONSGATE/ASSOCIATED PRESS

Estimated Box-Office Figures, Through Monday SALES, IN MILLIONS FILM DISTRIBUTOR WEEKEND* CUMULATIVE % CHANGE 1.Angel Has Fallen Lions Gate $14.8 $43.9 -31 2.Good Boys Universal $12.1 $59.1 4 3.The Lion King Disney $9.3 $523.5 16 4.Fast & Furious Presents: Hobbs & Shaw

Universal $8.2 $159 2

5.Overcomer Sony $7.8 $19.3 -5 *Friday, Saturday,Sunday and Monday Source: Comscore

Countries’ regulators complained the jet maker didn’t give enough detail about flight-control computer changes on the grounded 737 MAX.

LINDSEY WASSON/REUTERS

Khalid al-Falih’s power over Saudi economic policy has waned.

STEFAN WERMUTH/BLOOMBERG NEWS

“is moving his team into place to get this done.” Mr. Falih’s loss of the chair- manship represents the latest diminishment of his grip on Saudi economic policy. Until recently, in addition to his po- sition atop the kingdom’s oil- policy bureaucracy, Mr. Falih presided over a wide swath of economic planning. Last week, he lost two portfolios, over industrial and mining policy. His removal as Aramco chairman could help analysts and investors distinguish be- tween the energy ministry— which Mr. Falih will continue to lead—and the company, according to people familiar with the matter. International bankers are meeting this week with Aramco executives and Saudi officials to pitch them on advising on the IPO. The move coincides with a larger shake-up among key decision makers in Saudi Arabia. A government reshuffling announced late Friday included replacing the head of the royal court with an official seen as closer to the crown prince.

its schedules until Dec. 19. Both carriers indicated they were confident the jet will be ready to rejoin their fleets for the end-of-year holidays. Other carriers such as Southwest Airlines Co. and Air Canada have opted not to schedule any flights on the MAX until next year, when they feel more confident regulators will have signed off and the necessary training and maintenance will be complete. It could take upward of six weeks to train crews on new software and procedures and perform checks and maintenance on planes that have been parked since March, a South- west executive said last week. Airlines don’t want to run the risk of counting on the plane only to be caught off guard by another delay. People flying to visit friends and rela- tives for holidays and over school breaks often don’t have much flexibility to adjust plans on short notice, or much pa- tience for last-minute changes. U.S. carriers had 72 MAX jets in their fleets at the time of the grounding. That number was supposed to roughly dou- ble this year, making it in- creasingly difficult to work around the plane’s absence.

approval process. How much pilot training will be man- dated—and whether extra simulator time will be required before or after pilots take the controls of the 737 MAX—will be decided by regulators in in- dividual nations and regions. The FAA and most U.S. pilot-union leaders don’t favor upfront simulator training. Eu- ropean pilots and government officials have said regardless of the decision on simulator training for MCAS emergency response, many aviators on that side of the Atlantic are likely to require some simulator time to comply with other regulatory requirements before they resume flying the MAX. Airlines are trying to navi- gate the continued uncertainty about when the plane will re- turn as they plan the final months of the year and prepare for a crush of holiday travelers. On Sunday, American Air- lines Group Inc. said it is re- moving the MAX from its schedules for an additional month through Dec. 3, but said it remains confident the plane will be certified to fly this year. United Airlines Holdings Inc. announced a similar extended MAX cancellation Friday, saying it will strike the plane from

The August meeting was in- tended to delve into Boeing’s plans to improve safety by hav- ing both MAX flight-control computers operating on every flight. The original MAX de- sign, like earlier versions of the plane, relied on a single computer during each trip, making the jet more vulnerable to safety hazards caused by sen- sor malfunctions or failures. The apparent discord comes amid signs of additional hitches in the process of get- ting the green light and FAA certification for the MAX. In recent weeks, Boeing and the FAA identified another potential flight-control computer risk requiring additional software changes and testing, according to two of the government and pilot officials. Separately, the FAA con- firmed that an international group of experts it had assem- bled, including representatives of nine foreign regulatory bod- ies, will need more time to document its work and submit recommendations to U.S. certification efforts. Discussions about MAX pilot training pose the thorniest issues, which both U.S. and Eu- ropean regulators have put off resolving until the end of the

An FAA spokesman said the agency “continues to follow a thorough process, not a pre- scribed timeline, for returning the aircraft to passenger ser- vice.” Referring to various U.S. and international safety re- views under way, he added, “While the agency’s certification processes are well-estab- lished and have consistently produced safe aircraft de- signs, we welcome the scrutiny from these experts and look forward to their findings.” Delays created by the latest dust-up would line up with several estimates this summer from people in the government and industry that the planes wouldn’t carry passen- gers until 2020. Some industry officials still believe the latest problems can be resolved quickly enough to have the planes back in the air just before Christmas.

Continued from page B1

Boeing

Fa ces New

Delay

that Aramco is currently con- sidering a listing in two stages, offering a portion of its shares on the Saudi stock exchange later this year and an international offering in 2020 or 2021. Mr. Falih has been the pub- lic face of the listing effort, and one of the chief architects of Saudi Arabia’s ambitious plan to diversify its economy beyond oil under Prince Mo- hammed. Some people familiar with the matter said, though, that the crown prince has held Mr. Falih responsible for the lack of advancement in some of those diversification efforts. Mr. Falih, a former CEO and longtime executive of Aramco, has sometimes been seen as

Aramco

Names New

Chairman

Sales of Taylor Swift’s first album to hit streaming services and retail outlets simul- taneously fell short of the pop singer’s four previous albums, according to Nielsen Music. Even counting streaming ac- tivity, adjusted to make it comparable to album sales, “Lover” generated less consumption than Ms. Swift’s earlier albums in their first week after release. Even so, the album landed the biggest sales week of the year and sold more copies than any album since the pop star’s previous release, 2017’s “Reputation.” But at about 679,000 copies sold in the U.S., according to Nielsen, “Lover” missed the one-million mark each of her previous four albums surpassed, dem- onstrating anew how streaming has upended the record business. Unlike “Lover,” Ms. Swift’s

The shift to streaming re- duces the importance of first- week sales and in favor of long-term listening. Most fans who buy an album do so once within the first week; those who stream are likely to do so repeatedly over the next several weeks, months and years, generating revenue all the while. Over time, streaming becomes a larger piece of total consumption. “The first week is going to be the heaviest sales week, and for those people that bought the album, we’ve counted them. As you go forward, those streamers are going to come back and listen again and again and again,” said Mr. Bakula. For a typical pop album, he said, sales can decline more than 80% from the first week to the second and taper off dramatically thereafter. Streams, meanwhile, typically fall less than 50% and then tend to hold steady.

been available only for sale. Each of the major streaming services promoted Ms. Swift’s new album heavily. Spotify TechnologySA put her lyrics on its billboards in cities across the world, and is carrying an enhanced version of “Lover” featuring a video message and handwritten notes from the pop star. Streaming services, which let users listen to an unlimited amount of music in exchange either for a monthly fee or for listening to ads, have changed how music is consumed. The format makes up 80% of total music consumption in the U.S., according to Nielsen. In 2017, when Ms. Swift released “Rep- utation,” that share was about 60%. Industrywide album sales year-to-date have fallen 35% since then. Representatives for Ms. Swift and her label,Vivendi SA’s Republic Records, didn’t respond to requests for com- ment.

previous albums were available for streaming only several weeks after being released. Her embrace this time of Spo- tify, Apple Music, Amazon Music and Pandora helped Ms. Swift rake in millions of lis- tens during the album’s first week. But more of her fans chose only to stream her music rather than purchase phys- ical or digital copies. Overall consumption, including sales and streams, totaled about 867,000 units, earning the pop star her sixth No. 1 album on the Billboard 200 chart. Nielsen counts 1,250 sub- scription streams and 3,750 ad-supported streams as the equivalent of one album sale. The immediate release to streaming likely meant some fans who might otherwise have bought the album chose to stream it instead, said Niel- sen Music analyst David Ba- kula. He added that many more people listened to the album than would have had it

BUSINESS & FINANCE

BYANNESTEELE

Swift Hits No. 1 but Not 1 Million

rare seizure of Baoshang Bank, a regional lender based in northern China’s Inner Mongo- lia region. While China has said the takeover was an iso- lated incident and didn’t indi- cate broader problems, investors started to focus on a dozen small lenders, including Bank of Jinzhou. The notes, which are tech- nically considered preference shares, had already fallen sharply in price. The bonds

have dropped more than 20 cents on the dollar since late July to the mid-60s, according to a Nomura report. Bank of Jinzhou sold almost $1.5 billion of the securities in Octo- ber 2017. Nicholas Yap, a credit analyst with Nomura, said Bank of Jinzhou’s move probably caught some in the market off- guard. He said while China was likely to keep supporting troubled smaller banks, that help wouldn’t necessarily ex- tend to holders of lower-rank- ing debt like this, which is supposed to absorb losses if a bank becomes stressed. “Investors are likely to de- mand higher risk premiums for existing preference share issues as well as new issues when they come to market,” Mr. Yap said.

A Ake, Don......................B3 al-Falih, Khalid............B1 al-Rumayyan, Yasir.....B1 Aminian, Ali................A3 Andreessen, Marc.......B5 B Bakula, David..............B2 Bucher-Koenen, Tabea .....................B10 Butera, Scott..............A2 C Clayton, Jay................B5 Cook, Tim....................B4 Croft, Helima..............B2 G

Giancarlo, J. Christopher..... .....B5 Grove, Chris................A2 H Haag, Robert...............B3 Haynes, Mary..............B1 Hoke, David.................B5 K Kottke, Kyle................B3 Krawcheck, Sallie......B10 L Lacewell, Linda...........B5 Leyen, Ursula von der B4 M Milosevich, Kim..........B5

P Poincy, Dave de..........B3 R Reiners, Lee................B5 Robins, Jason.............A2 S Saunders, Lauren..B1,B5 Sleper, Stuart.............B3 Steklov, Einat.............B5 Swift, Taylor...............B2 W Werbach, Kevin...........B5 Wozniak, Dave............B3 Y Yap, Nicholas..............B2

In February,Banco San- tanderSA in Spain unnerved investors by failing to redeem a bond as expected. Bank of Jinzhou plans to forgo dividends for the 12 months to Oct. 26, it said in a weekend filing, because its capital ratios don’t meet regulatory requirements. The bank’s tier-1 capital adequacy ratio was 5.14% as of June 30—close to the 5.125% regulatory minimum below which the CoCos would convert to common stock. The payments are noncu- mulative, meaning if Jinzhou starts making payments again, it doesn’t have to pay the missed amount, which totals about $82 million. These bonds usually pay an annual coupon of 5.5%. Similar securities issued by peers such asBank of Chong- qing and Huishang Bank Corp. declined slightly in price, and were marked about 1 cent lower, said a credit trader in Hong Kong. In May, accounting firm Ernst & Youngresigned as Jinzhou’s auditor. Two months later,Industrial and Commer- cial Bank of Chinaand two asset managers specializing in distressed debt said they would buy stakes totaling 17.3% in the bank. On Saturday, the bank reported delayed full-year re- sults for 2018, saying it had a net loss of 4.59 billion yuan ($640 million), while nonperforming loans had leapt to 4.99% of its loan book. It also detailed figures for the first six months of 2019, saying the nonperforming loan ratio had risen further to 6.88%, while the same ratio for loans made to individuals running small businesses hit 14.3%. China’s banking regulator began tight- ening standards last year, requiring lenders to treat loans overdue by more than 90 days as nonperforming. —Grace Zhu contributed to this article.

Bank Skips

Coupon

Payments

The bonds have dropped more than 20 cents on the dollar since late July.

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The Wall Street Journal - 03.09.2019

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