News Archive

EBay follows Icahn’s advice, plans PayPal spinoff in 2015

(Reuters) – EBay Inc’s agreement on Tuesday to spin off PayPal next year will give the unit more flexibility to strike deals in the rapidly evolving payments space as growth at the company’s traditional e-commerce business slows.

The surprise move is a huge about-face for eBay’s leadership, including Chief Executive Officer John Donahoe, who resisted shareholder activist Carl Icahn’s calls for a split earlier this year and led a months-long campaign to convince investors that eBay should remain intact.

Icahn, eBay’s sixth-largest shareholder, eventually backed off in April. But eBay directors and executives shifted their stance on the split in June after a six-month internal study of the payments landscape, Donahoe said in an interview.

“We felt like a couple things were changing,” Donahoe said. “Most notably, the pace of change in this competitive environment, and payments and commerce is accelerating and will continue to over the next three to five years.”

By splitting off PayPal, the fast-growing payments division and the new eBay would have “more focus, more flexibility, more agility, more ability to move quickly,” said Donahoe, who will step down as CEO after the spinoff in the second half of 2015.

Donahoe and Chief Financial Officer Bob Swan, who will also leave next year, plan to serve on the boards of one or both companies after the split. EBay will spin off PayPal as a publicly traded company in a transaction that will be tax-free to shareholders.

PayPal’s next CEO will be Dan Schulman, former head of American Express Co’s online and mobile payment business. The new eBay will be headed by Devin Wenig, president of eBay marketplaces and former head of the markets division at Thomson Reuters Corp.

EBay’s shares jumped as much as 8.8 percent after the announcement. They closed up 7.5 percent at $56.63.

By freeing itself from the slower-growing parts of eBay, PayPal can build partnerships with e-commerce rivals and seize market share from payment startups like Stripe, backed by several PayPal founders, and technology behemoths like Apple Inc, which unveiled its own mobile payments initiative earlier this month.

“There are those who have not embraced PayPal because they’re part of eBay,” said Richard Sichel, chief investment officer of The Philadelphia Trust Co, which manages $2 billion and owns eBay shares. “It’s more of a pure play then.”

The split highlights the slowing growth of the marketplace business, which may be less alluring for some investors on its own. PayPal was founded in the late 1990s, went public in 2002 and was acquired by eBay soon after for $1.5 billion.

The “transaction implies negative trends for the eBay marketplace business, which has been suffering from greater competitive headwinds recently,” RBC Capital analyst Mark Mahaney said in a research note.


EBay has been reviewing the possibility of a PayPal split every year since 2008, when the company made the decision to sell Skype, Donahoe said. The board reviewed this option during an annual executive retreat, which this year happened just a week after David Marcus, who led PayPal for two years, stepped down to run Facebook Inc’s messaging products.

Marcus’ exit helped “reinforce” the decision to spin off PayPal and allowed the board the chance to attract executives by offering the possibility of a CEO role, Donahoe said. He added that the spinoff helped PayPal attract Shulman to the post.

“I don’t think we would have gotten Dan if it weren’t for having a CEO opportunity and he is just the right guy at the right time,” Donahoe said on a conference call with analysts.

PayPal could be acquired again down the line by a technology company trying to expand into mobile payments, such as Apple, investors and analysts said. The standalone marketplaces division of eBay could also be an acquisition target, they said.

The split comes as several activist investors step up pressure on other companies to spin off assets as a way to create value. B/E Aerospace Inc and JDS Uniphase Corp are among those that did, while others like Darden Restaurants Inc and EMC Corp are resisting.

“This is clearly not a move executed from a position of strength,” Macquarie Capital analyst Ben Schachter said in a research note on eBay’s PayPal spinoff.

Icahn pushed for a PayPal spinoff this year in an acerbic war of words that quieted down in April. He also withdrew his two nominees to eBay’s board, but in a concession, eBay added a 10th independent director, David Dorman, a founding partner of investment firm Centerview Capital Technology.

Meanwhile, Third Point LLC, a hedge fund run by activist Daniel Loeb, has taken a “significant” stake in eBay Inc and has had discussions with its chief executive officer, a source familiar with the matter said on Tuesday.

“We are happy that eBay’s board and management have acted responsibly concerning the separation – perhaps a little later than they should have, but earlier than we expected,” Icahn said in a blog post.

EBay had a market value of $65.36 billion as of Monday.

The spinoff will separate the payment business, which contributes a little over 40 percent to eBay’s revenue, from its marketplaces and enterprise businesses, such as the online auction operation.

EBay said revenue in its marketplaces and enterprise unit increased 10 percent to $9.9 billion in the last four quarters, while PayPal revenue rose 19 percent to $7.2 billion.

Goldman Sachs and Allen Co LLC are eBay’s financial advisers and Wachtell, Lipton, Rosen and Katz is its legal counsel.

(Reporting by Deepa Seetharaman in New York and Supantha Mukherjee in Bangalore; Additional reporting by Lehar Maan in Bangalore, Liana B. Baker in New York, Svea A. Herbst in Boston; Editing by Savio D’Souza, Robin Paxton, Jeffrey Benkoe and Bernard Orr)

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Pimco CEO says firm to expand equities business: CNBC

NEW YORK (Reuters) – Pimco intends to expand its equities business and there will be no difference in the firm’s portfolio management following the departure of former Chief Investment Officer Bill Gross, two top Pimco executives said on Tuesday.

Pimco plans to “absolutely grow” its equities business, Chief Executive Officer Doug Hodge told CNBC. There will also be “no difference” in the way money is managed now compared with when Gross was still at Pimco, group Chief Investment Officer Dan Ivascyn told the cable television network.

“At least for the coming weeks and even the next couple of months, expect us to be very comfortable and only make incremental change across most client accounts,” Ivascyn said.

Ivascyn said the firm was still following its “New Neutral” thesis of interest rates globally remaining low for a prolonged period of time, and that the 10-year Treasury note yield offered “reasonable value” and would likely hit 3 percent over the next few years.

He also said the U.S. dollar would continue to strengthen against many global currencies. The 10-year yield was last at 2.505 percent in Tuesday afternoon trading.

Gross, the bond market’s most renowned investor, quit Pimco for distant rival Janus Capital Group Inc (JNS.N) last Friday, the day before he was expected to be fired from the huge investment firm he co-founded more than 40 years ago.

Hodge told Reuters on Sept. 28 that Pimco was moving away from a founder-led model and that the asset manager’s flagship fund, the Pimco Total Return Fund, formerly run by Gross, “does not define Pimco.”

Gross managed the world’s biggest bond fund, with $222 billion in assets, since 1987. He co-founded Pimco, a $2 trillion asset management firm, in 1971.

Newport Beach, California-based Pimco is a unit of German insurer Allianz SE (ALVG.DE)

(Reporting by Sam Forgione; Editing by Diane Craft and Dan Grebler)

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Argentina defies U.S. court order by depositing debt payment

BUENOS AIRES (Reuters) – Argentina deposited a $161 million bond interest payment with a newly appointed local trustee on Tuesday, the Economy Ministry said, defying a U.S. judge who held it in contempt a day earlier for taking illegal steps to meet its debt obligations.

The country wants to show it can service its debt and that its failure in July to complete a payment to holders of bonds that were restructured after its 2002 default was the result of adverse U.S. judicial rulings.

“By making this deposit, Argentina confirms once again its unshakeable commitment to meet its obligations to bondholders,” the ministry said in a statement.

It was not clear how many bondholders would receive their coupon payments before the end of the Sept 30 deadline without the assistance of foreign financial intermediaries, which could violate the U.S. court orders if they aid Argentina.

Luxembourg-based clearing house Clearstream said it always abided by court rulings and a source at the trustee bank, state-controlled Nacion Fideicomisos, acknowledged little of the deposit had been transferred to creditors.

If the funds fail to reach bondholders, a 30-day grace period would be triggered, after which the default, which has so far confined to Discount bonds, would spread to the Par series.

The central bank deposited the coupon payment on its foreign law Par bonds with Nacion Fideicomisos after the government removed the former trustee, Bank of New York Mellon Corp, to skirt the U.S. court rulings.

Argentina’s July default came after U.S. District Judge Thomas Griesa blocked an end-June coupon payment, barring it from servicing its restructured debt until it paid in full a small group of U.S. hedge funds that rejected the terms of bond swaps in 2005 and 2010.

The Argentine government responded by enacting a law allowing it to make payments locally to keep the money beyond Griesa’s reach.


Griesa on Monday held Argentina in contempt and issued a warning that the government must stop trying to get around his rulings.

Huge question marks surround how Argentina will locate all holders of its debt across 15 separate bond series.

Financial intermediaries with a U.S. footprint would need to collaborate in the process of identifying bondholders but in doing so they too would risk violating Griesa’s rulings.

“Clearstream is monitoring the situation closely and always complies with court rulings on this subject,” said a spokesman.

Belgium-based Euroclear, another financial services company that handles Argentine debt payments, declined to comment.

“This is about making a deposit so that no one can say you did not want to pay,” said Roberto Drimer, an economist at Buenos Aires-based consultancy VaTnet. “Only a few will get paid.”

Investors and fixed income traders say a default on the Par bond series would increase the risk that creditors would demand accelerated payment of their bond holdings, which could leave the cash-strapped country facing claims of up to $30 billion.

(Additional reporting by Chris Vellacott in London)

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Wall St. ends down for day, month; indexes gain in quarter

NEW YORK (Reuters) – U.S. stocks slipped on Tuesday, dragged down by energy and materials shares as economic data disappointed.

Major indexes also posted losses for the month, but ended the quarter with gains.

The SP energy index .SPNY was down 1.2 percent on Tuesday following a more than 3 percent drop in U.S. oil prices. The SP materials index .SPLRMA also fell 1.2 percent. Shares of Chevron (CVX.N), down 1 percent at $119.32, were the biggest drag on the SP 500.

The Thomson Reuters Jefferies CRB commodity index .TRJCRB ended down 1.6 percent, its largest daily decline since June 2013.

EBay (EBAY.O), up 7.5 percent at $56.63, was the SP 500’s biggest percentage gainer for the day, helping to limit losses. The company announced a plan to spin off its PayPal unit.

U.S. consumer confidence fell in September for the first time in five months and home prices in July rose less than expected from a year earlier, underscoring the unsteady nature of U.S. growth.

Analysts are skeptical of how many more gains are in store for the market this year, with the SP 500 up 6.7 percent since Dec. 31 and third-quarter earnings still ahead.

“The market continues to be very resilient, but it’s a monster market. I think you could have a weaker fourth quarter than you’ve gotten used to, and I think we’ve made our highs for the year already,” said Uri Landesman, president at Platinum Partners in New York.

Apple (AAPL.O) shares rose 0.6 percent to $100.75 after China approved iPhone 6 sales to begin Oct. 17.

The Dow Jones industrial average .DJI fell 28.32 points, or 0.17 percent, to 17,042.9, the SP 500 .SPX lost 5.51 points, or 0.28 percent, to 1,972.29 and the Nasdaq Composite .IXIC dropped 12.46 points, or 0.28 percent, to 4,493.39.

For the month, the Dow was down 0.3 percent, the SP 500 was down 1.5 percent and the Nasdaq was down 1.9 percent. For the quarter, the Dow rose 1.3 percent, the SP 500 gained 0.6 percent, and the Nasdaq climbed 1.9 percent.

Among the most active stocks on the NYSE were Ford Motor (F.N), down 2.12 percent to $14.79, a day after its disappointing profit forecast.

Besides eBay and Apple, the most actively traded stocks on Nasdaq included Move Inc (MOVE.O), up 37.1 percent at $20.96.

Declining issues outnumbered advancers on the NYSE by 1,942 to 1,133, for a 1.71-to-1 ratio on the downside; on the Nasdaq, 1,864 issues fell and 824 advanced for a 2.26-to-1 ratio favoring decliners.

The benchmark SP 500 index posted 15 new 52-week highs and 18 new lows; the Nasdaq Composite recorded 42 new highs and 138 new lows.

About 7.2 billion shares changed hands on U.S. exchanges, above the 6.1 billion average for the last five sessions, according to data from BATS Global Markets.

(Editing by Nick Zieminski)

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Portugal sounds out Spanish banks on Novo Banco sale: sources

MADRID (Reuters) – Portugal has begun sounding out Spanish banks on their interest in buying Novo Banco, the successor to the state-rescued Banco Espirito Santo (BES), several sources familiar with the talks said on Tuesday.

Spain’s mid-sized Sabadell (SABE.MC) and Popular (POP.MC), which already have offices and interests in neighbouring Portugal, were among those approached by the Bank of Portugal, the sources said.

“For now there is no formal sales process, nor is it clear exactly how much of Novo Banco is up for sale, though it’s estimated to be about 70 billion euros ($88 billion) worth of assets,” one of the sources said, on condition of anonymity.

Popular would be open to analyzing a potential acquisition of Novo Banco, depending on the conditions, another source close to the discussions said. But talks around a disposal were still very preliminary, the person added.

Spanish banks are unlikely to be embarking on any purchases before the results of Europe-wide health checks are unveiled at the end of October, while the sources added that a formal sales process around Novo Banco may only start at year-end.

The Bank of Portugal was not immediately available for comment, while Popular and Sabadell declined to comment on the talks, first reported by Spanish newspapers Cinco Dias and Expansion on Tuesday.

Portugal’s government has made it clear it wants a speedy sale of Novo Banco, saying two weeks ago a disposal was needed to avoid further risks. The franchise was dealt an early blow when three managers tasked with its turnaround resigned earlier this month.

Portugal also wants to try and recover 4.9 billion euros of aid, mostly public funds, poured into the lender in August.

BES, until recently the country’s largest listed lender, was rescued after the collapse of the business empire of its founding Espirito Santo family. The bulk of its risky assets were left in the original bank when Novo Banco was spun out.

Spain’s biggest lender Santander (SAN.MC), which operates through Santander Totta in Portugal, and no2 bank BBVA (BBVA.MC) have also been seen as potential suitors for Novo Banco, while Portuguese media have mentioned BPI (BBPI.LS) as a possible contender.

BBVA had been trying to sell out of Portugal, however, sources told Reuters earlier this year. BBVA and Santander declined to comment.

Popular has around 190 bank offices in Portugal, while Sabadell has a 5.5 percent stake in the country’s BCP bank (BCP.LS). Spain’s Caixabank (CABK.MC), meanwhile, has a 44.1 percent holding in BPI.

(Additional reporting by Axel Bugge in Lisbon, Writing by Sarah White)

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AT&T expects customer usage of NEXT to reach 50 percent in third quarter

WASHINGTON (Reuters) – ATT Inc (T.N) expects that customer use of its equipment installment plan will have reached 50 percent in the third quarter, the company said in a regulatory filing on Tuesday, fewer customers than analysts expected.

Last year, faced with growing competition from rivals, ATT debuted its NEXT equipment financing plan, which decouples the cost of service from the cost of devices.

In July, ATT said it expected two-thirds of its customers to be on the plan by the end of the year.

In previous quarters, the equipment financing plan has resulted in a lower average revenue per user for ATT but higher equipment revenue, as customers take on the majority of the burden of paying for their devices.

A shrinking base of new customers has made the wireless industry increasingly competitive, with carriers slashing prices and launching new plans every few weeks as they vie for customers.

Still, ATT, in its filing released on the final day of the third quarter, said it expects its postpaid customer defection rates to remain at 1 percent or lower for the quarter. The company will release third-quarter results in October.

As the market for new smartphone customers shrinks, wireless companies are turning to connected devices for growth.

ATT said it expects to service nearly half of new connected vehicles in 2015. Connected cars link to a wireless provider’s network and allow drivers to unlock a car remotely and make it a wireless hot spot for other devices, among other functions.

ATT said it currently provides connectivity to nearly 2 million cars and added 500,000 cars in the third quarter.

The carrier expects to connect more than 10 million vehicles by the end of 2017.

(Reporting by Marina Lopes; Editing by Leslie Adler)

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EU says Ireland swapped Apple tax deal for jobs

BRUSSELS/LONDON (Reuters) – The European Union has accused Ireland of swerving international tax rules by letting Apple shelter profits worth tens of billions of dollars from revenue collectors in return for maintaining jobs.

European Competition Commissioner Joaquin Almunia told the Dublin government in a letter published on Tuesday that tax deals agreed in 1991 and 2007 amounted to state aid and may have broken EU laws.

“The Commission is of the opinion that through those rulings the Irish authorities confer an advantage on Apple,” Almunia wrote in the letter, which was dated June 11.

Apple said it had received no selective treatment.

“We’re subject to the same tax laws as the countless other companies who do business in Ireland,” a spokesman said.

An Irish government spokesman referred to previous statements saying it followed EU rules. When publication of the letter was flagged on Monday the Irish finance department said it was confident it had not breached state aid rules and had responded to the Commission to address “concerns and misunderstandings.”

The Commission said the tax rulings were “reverse engineered” to ensure that Apple had a minimal Irish bill, adding that minutes from meetings involving Irish officials showed that the Irish tax authority did not even attempt to apply international tax rules in its deals with Apple.

Instead, the company’s tax treatment had been “motivated by employment considerations”, the Commission said, citing the minutes of meetings between Apple representatives and Irish tax officials.

An Apple spokesman referred to previous statements where the company denied seeking any “quid pro quo” from Dublin.

The company employs 4000 people at a manufacturing plant in Cork, south-west Ireland, its only such facility outside of the United States.

Apple, along with other multinationals, has found its arrangements scrutinized in recent years as corporate tax avoidance rose to the top of the political agenda in the United States and Europe.

Widespread profit shifting by tech giants was referred to by Britain’s finance minister George Osborne on Monday as one of the problems his government would create new measures to tackle, and the G20 group of leading economies has also asked the OECD to review international tax rules.

The EU is also investigating tax deals between coffee chain Starbucks Corp and the Netherlands and Luxembourg tax rulings received by a subsidiary of automotive group Fiat.


Apple Inc licenses the right to exploit Apple intellectual property in Europe, Africa and Asia to two Irish-registered subsidiaries that are not registered for tax in any country at all, a U.S. Senate investigation revealed last year.

A series of inter-company agreements with contract manufacturers and other Apple distribution companies ensures that tens of billions of dollars of profits flow into Apple Operations Europe (AOE) and Apple Sales International (ASI), the Senate probe found.

The European Commission is now questioning Irish tax authority rulings which allowed AOE and ASI to declare combined annual taxable profits of just 40 to 80 million euros in recent years.

Those arrangements save Apple – the world’s most valuable corporation – billions of dollars in tax each year, analysts said.

Under EU rules, if the Commission’s suspicion that the tax treatment amounted to illegal state aid is proven, the company could be forced to pay that money back to the Irish government.

Apple paid an average tax rate of just 2.5 percent on around $109 billion of non-U.S. profits in the past five years – a fraction of Ireland’s 12.5 percent tax rate.

Even if the EU deemed an additional 10 percentage points in tax should have been charged in Ireland on all that money, the consequent hit of around $10 billion would scarcely dent Apple’s $111 billion offshore cash pile.

But any outcome is highly uncertain and potentially distant.

The EU can take as much as five years to decide on state aid cases and Ireland could challenge any ruling in the European Court of Justice.

Apple could also challenge any tax demand in court, said Neal Todd, corporate tax partner at Berwin Leighton Paisner.

“We’re in uncharted water here,” Sheila Killian, Assistant Dean in Accounting Finance at the University of Limerick, said.

Some experts think the most likely outcome is that Ireland would simply be forced to be less accommodating with multinationals in future.

That could limit its ability to attract international investment, although the country hopes this could be balanced by planned OECD tax changes that may handicap low tax competitors, like Singapore and Switzerland, Killian said.

The Commission also criticized the fact that Apple and Ireland’s 1991 tax agreement had lasted 16 years – far longer than the five year limit that many other EU countries apply when issuing rulings about how transactions should be treated for tax purposes.

One function of that tax agreement was that while revenues from the sale of Apple’s hot products like the iPad soared, the group’s taxable profit in Ireland did not.

An unnamed tax advisor to Apple “confessed that there was no scientific basis for the figure” that Apple would declare as its Irish taxable income, the Commission noted, from minutes of meetings between Irish tax authority officials and the advisor.

The minutes of another meeting say that a tax advisor for the company stated it was his view that Apple was deliberately shifting profits into the lightly taxed Irish operation.

(Additional reporting by Padraic Halpin in Dublin; Editing by Sophie Walker)

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Venezuela-Exxon arbitration ruling due this week: sources

HOUSTON (Reuters) – The World Bank arbitration tribunal will give its final award ruling this week on a multibillion- dollar claim by Exxon Mobil Corp against Venezuela over the 2007 nationalization of two oil projects, legal sources said on Tuesday.

“The final ruling will be delivered to the parties on Thursday, Oct. 2, according to a notification they received last week,” one of the sources told Reuters.

Another source said lawyers for state oil company PDVSA had left the country to await the ruling, although it was not immediately clear where they will receive the document.

The International Centre for Settlement of Investment Disputes (ICSID), which is deciding the case, formally has until the end of October to meet a 90-day deadline for a ruling following the close of proceedings on July 28. Pro-opposition Venezuelan daily El Nacional cited a PDVSA source this week as saying Exxon would be awarded between $700 million and $1.2 billion for the takeover of its Cerro Negro heavy oil project and its smaller La Ceiba.

“There are different views and expectations about the valuation amount,” one of the legal sources said. “A figure below $1 billion will be highly favorable to Venezuela, but there are no guarantees of that, and the lawyers of both parties are just hoping for the best.”

The company received $908 million from PDVSA in 2012 after a separate decision by the International Chamber of Commerce over a contract dispute linked to the same projects. It was unclear if the ICSID would deduct that sum in its ruling.

Venezuela is facing about 20 cases at the World Bank tribunal after a wave of nationalizations under the late President Hugo Chavez’s socialist government.

There has been no official word on the case from either PDVSA or Exxon Mobil. Nor was there any new information on the ICSID website where judgments are posted.

(Writing by Andrew Cawthorne; Editing by Lisa Von Ahn)

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Airbus wins European approval for its new A350 jet

PARIS (Reuters) – Planemaker Airbus won European safety approval on Tuesday for the A350, clearing the main regulatory hurdle before its newest and most technically advanced jet can start flying passengers.

The European Aviation Safety Agency said Airbus, the planemaking unit of Airbus Group, had proved the jet’s airworthiness in more than 60,000 hours of certification work including 250 hours spent with safety inspectors in the air.

“We dealt with a very mature aircraft,” EASA Executive Director Patrick Ky said.

The version of the jet certified by EASA on Tuesday, the A350-900, is designed to seat 314 passengers and is due to enter service with Qatar Airways before the end of the year in direct competition with Boeing’s 787 Dreamliner.

A larger model, the 350-seat A350-1000, which targets the “mini-jumbo” market occupied by the Boeing 777, is due to enter service in 2017 after a separate safety certification process.

Development of a smaller model, the A350-800, has been effectively halted due to weak demand, prompting Airbus recently to upgrade its older A330 to address the 250-300-seat market.

Asked how long it would take to deliver the first A350 to Qatar Airways, which recently delayed taking delivery of its first A380 in a dispute over cabin fittings, program chief Didier Evrard said the airline’s first jet was ready to start pre-delivery trials, but declined to give a precise estimate.

“It is a very cooperative phase with our customer and we are going to address it together,” Evrard said.

“It will be before the end of the year for sure,” he said, referring to the planemaker’s target for first delivery. “It is a question of execution. There is no outstanding ‘unknown’,” he added.

Both Airbus and Boeing say their latest generation of long-distance mid-sized aircraft will cut fuel costs by at least 20 percent compared with traditional metallic aircraft.

The A350 is the result of eight years of design and development work costing an estimated $15 billion and involving 213 suppliers.

It went through several design changes as Airbus sought to counter its rival’s lead in deliveries of wide-body aircraft, but Airbus says it is confident it has the right plane.

Airbus has sold 750 of the A350 jets, worth $295 million to $340 million each at list prices, since their launch in 2006.

That compares with 1,048 orders for the Dreamliner, which has been on the market longer, having been launched in 2004 and entered service in 2011.


Although the A350 is ready for service, it will not be able to fly on the longest oceanic routes for which it was designed until Airbus also receives clearance for extended operations, which its executives expect to happen within days or weeks.

A European safety official said the aircraft would be authorized to fly on virtually any world route.

Airbus is also waiting for certification from the Federal Aviation Administration, but question marks remain over how quickly and extensively the U.S. regulator will grant extended operations after problems with the entry to service of the 787.

The ability to fly long routes over water is determined by the amount of time an aircraft is allowed to operate on one engine in the event that the other engine fails.

Industry sources said Airbus had asked European authorities to clear the A350 to fly for up to 370 minutes on one engine, exceeding the so-called ETOPS limit of 330 minutes on the 787.

The global 787 fleet was grounded from January to April last year after two lithium-ion batteries burned out in separate incidents in Japan and the United States.

Airbus had intended to use lithium-ion batteries, which weigh less than traditional power packs, for the A350 but switched back to traditional nickel-cadmium in the face of the 787 problems to prevent its own schedule slipping.

Evrard said Airbus had agreed with EASA how to return to the lithium-ion technology and that this would happen in 2016.

“We have flown the lithium battery for all development aircraft except the last one and we have accumulated experience in flight,” he told reporters, adding he was “absolutely” certain they would be safe.

Japan’s transport authority said last week said it was unable to find the root cause of the overheating of a battery on a 787 owned by ANA Holdings in January 2103.

Boeing says its reinforced battery system ensures the safety of the 787 Dreamliner.

(Reporting by Tim Hepher; Editing by Andrew Callus and Pravin Char)

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