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Carriers are taking steps to prepare for potential FAA flight limits when a new 5G wireless service goes live Jan. 5

Airlines have begun planning for possible flight disruptions from a new fifth-generation cellular service slated to go live early next year, industry officials said.

The early steps by airlines are a response to a Federal Aviation Administration order earlier this month. The directive outlined potential restrictions on landing in bad weather in up to 46 of the country’s largest metropolitan areas, where the new wireless service is scheduled to roll out starting Jan. 5.

The planning comes as U.S. regulators consider two proposals––one from the telecom industry and another from the aviation industry––for protecting aircraft from potential 5G interference with cockpit safety systems. Commonplace in modern air travel, they help planes land in poor weather, prevent crashes and avoid midair collisions.

The wireless industry has said that the planned service poses no risk to aircraft, while the Federal Aviation Administration has said it is worried that the frequencies the cellular signals use could possibly disrupt the cockpit systems.

The airlines are in the middle of the dispute. “If there’s any kind of weather, if there’s high winds, if the visibility isn’t good because of smog, you can’t use that equipment,” United Airlines Holdings Inc. UAL 1.82% Chief Executive Scott Kirby told reporters Dec. 15. “You can’t land at airports—at Chicago O’Hare, at Atlanta, at Detroit—just think about what that means. This cannot be the outcome.”

As they game out various scenarios, airlines are awaiting specifics from the FAA about how broad or targeted the restrictions on landings might be—and where—starting Jan. 5, industry officials said. About a week before that date, the FAA is expected to issue pilot warnings specifying which airports will be subject to restrictions, people familiar with the matter said.

Air-safety regulators have been analyzing cell-tower and aircraft data to determine where 5G signals could potentially interfere with aircraft, people familiar with the matter said.

Despite the unknowns, airlines are assessing what canceled or diverted flights could mean for fuel, aircraft and crew needs, said George Paul, vice president for technical services at the National Air Carrier Association, which represents smaller cargo and passenger airlines.

“It’s like a bad hurricane—you don’t know where it’s going to hit until it actually gets a little closer,” Mr. Paul said.

The early planning by airlines is the result of long-simmering conflict between U.S. telecom and aviation regulators, which have been working out of sync for more than a year.

The Federal Communications Commission auctioned off portions of the 5G-friendly frequencies, also known as C-band, about a year ago. Top auction winners AT&T Inc. T 0.30% and Verizon Communications Inc. VZ 0.80% were authorized to start offering some of the faster cellular service early this month, but the companies delayed their rollout until Jan. 5 to address the FAA’s still-unresolved concerns. The companies also pledged to dim the power of C-band signals, especially near airport runways, for an additional six months.

Flight limits could complicate the U.S. airline industry’s recovery from the Covid-19 pandemic. Domestic travel has bounced back, and airlines have been betting on a surge in demand for international flights in summer 2022. While some carriers might need to trim travel plans because of Boeing Co. BA 0.96% ’s delays delivering its 787 Dreamliner, Mr. Kirby, speaking at a Dec. 15 Senate hearing, called possible 5G restrictions the “biggest and most damaging potential issue facing us.”

U.S. telecom industry officials have disputed claims about the new technology’s safety risks. “The aviation industry’s fearmongering relies on completely discredited information and deliberate distortions of fact,” said Nick Ludlum, a spokesman for the wireless industry group CTIA. “We will launch this service in January with the most extensive set of protective measures in the world.”

Regulators are at odds over competing proposals from the U.S. aviation and telecom industries to limit the new 5G signals near airports. At a high-level meeting Wednesday that included Transportation Secretary Pete Buttigieg and FCC Chairwoman Jessica Rosenworcel, officials discussed both industries’ proposals to create buffer zones around airports, people familiar with the matter said.

Mr. Buttigieg requested that the FCC consider the aviation industry’s proposal, some of these people said. FCC officials described that proposal as a nonstarter that would amount to a no-5G option, another person familiar with the meeting said.

The FCC’s Ms. Rosenworcel has said she believed officials would find a solution to allow 5G deployment swiftly and safely. “I have confidence in the mitigations that have been offered up by the wireless industry,” she said at a Dec. 14 press conference.

An FAA spokesman said the regulator continues to work with other federal agencies and wireless companies so “5G C-band and aviation can safely coexist.”

Airlines also are looking to aerospace manufacturers for guidance.

Boeing, which at times makes its own safety recommendations, is evaluating potential risks not addressed by the FAA, people familiar with the matter said.

Boeing engineers have been examining issues related to takeoff and pilots’ responses to possible 5G interference, according to one of these people.

European plane maker Airbus SE said it was working with its regulators and the FAA to provide guidance to airlines. The European Union Aviation Safety Agency, the FAA’s counterpart, doesn’t view the 5G issue with as much concern as American regulators do, a person close to the regulator said, but is aware of unconfirmed reports of 5G interference and is fielding inquiries from worried airlines.

The scope of any U.S. flight restrictions is expected to depend largely on 5G buffer zones around airports. Such proposed protections include reduced 5G signal strengths and limits on antennas pointed in certain directions to avoid potential interference with planes’ radar altimeters, which measure the distance between aircraft and the ground.

A preliminary FAA analysis has found that the aviation industry’s proposal would likely avoid significant disruptions of U.S. air traffic, people familiar with the matter said. The agency’s early analysis of the telecom industry’s proposal suggests that it could lead to widespread cancellations and diversions in bad weather, these people said.

The FAA may also determine that certain radar altimeters aren’t at risk of interference, exempting aircraft equipped with them from any flight limits, according to a senior White House official involved with mediating the dispute.

Larger airport buffer zones would prevent cellphone carriers, which spent $81 billion for C-band licenses, from reaching as many customers in some of the often densely populated cities they serve.

Speaking at the recent Senate hearing, Delta Air Lines Inc.’s DAL 2.12% operations chief, John Laughter, said: “The safety concerns with aircraft and aviation are very real, and I also know that there’s a solution here.”

A deal could be completed as soon as this week

Bank of Montreal BMO -2.80% is in advanced talks to buy BNP Paribas’s BNPQY -2.15% U.S. unit, Bank of the West, in what would be one of the largest recent bank deals.

The Canadian bank could finalize an agreement as soon as this week, according to people familiar with the matter, assuming the talks don’t fall apart or get delayed.

Terms of the potential deal couldn’t be learned.

The deal would facilitate Bank of Montreal’s expansion into the U.S., where it has worked to build its presence in recent years. Combined, the banks would have some $870 billion in assets.

Bank of the West operates commercial- and consumer-banking segments, in addition to specialized financing and other services. The San Francisco-based bank has around $89 billion of deposits, assets of about $105 billion and roughly 500 branches in the Midwest and West. It has been owned by France’s BNP since 1979.

Bloomberg reported Thursday that BMO, as Bank of Montreal is known, had held initial talks about buying the BNP unit, which it said could be worth about $13.7 billion.

Bank of Montreal is the fourth-largest bank in Canada. Its U.S. division delivers about 38% of the bank’s revenue today, up from about 28% three years ago, Chief Executive Darryl White said on an investor call earlier this month. Earnings for the bank’s U.S. division rose 58% in the fourth quarter, compared with a 42% increase for its Canadian division.

In the U.S., BMO operates commercial, retail, wealth-management and capital-markets businesses. The bank has said it sees a major opportunity for growth in its U.S. wealth-management business.

BMO opened its first stateside branch in 1818, about a year after its founding. In the 1990s, it became the first Canadian bank to trade on the New York Stock Exchange. The firm has a market value of around $69 billion.

For larger Canadian lenders that want to expand, limited domestic options for growth have prompted them to look across the southern border.

Royal Bank of Canada, the country’s second-largest lender, bought Los Angeles-based City National Corp. for $5.4 billion in 2015. Canada’s biggest bank, Toronto-Dominion, now operates more branches in the U.S. than in Canada.

European lenders that planted flags in the U.S. starting in the late 1980s have failed to gain much ground. Royal Bank of Scotland Group PLC sold out of Citizens Financial Group Inc. in 2015. HSBC Holdings PLC said last year it would close one-third of its U.S. branches.

BBVA of Spain agreed to sell its U.S. arm roughly a year ago to PNC Financial Services Group Inc. for around $11.6 billion in a deal that created the fifth-largest retail bank in the U.S.

While big bank mergers have been rare since the 2008 crisis, there have been more so far this year than any time since then.

But federal financial regulators have expressed interest in tamping down on the spate of mergers. Democratic members of the Federal Deposit Insurance Corporation’s board have in recent weeks pushed to review regulations around big-bank mergers. Banking-industry officials fear that such a review by the FDIC or other regulators, namely the Federal Reserve and Office of the Comptroller of the Currency, could result in stricter controls on larger deals.

The continued consolidation of financial institutions leaves consumers with fewer banking options and reduces competition, progressive policy makers have argued. Regional banks see joining forces as the best way to fight paltry lending profits and the ever-rising outlays required to keep pace with the technology improvements of the largest banks.

Kaisa says it didn’t pay sums due on dollar bonds, and has hired a restructuring adviser

Kaisa Group Holdings Ltd., which in 2015 became one of the first Chinese developers to default abroad, said it had failed to make several payments on dollar bonds as planned, and is talking to creditors about a wide-ranging restructuring plan.

The move sets the stage for parallel debt workouts by two of the mainland real-estate sector’s biggest offshore borrowers, Shenzhen-based Kaisa and China Evergrande Group. EGRNF 5.00% Kaisa said Monday it had $11.8 billion of dollar bonds outstanding, while the tally for Evergrande is nearly $20 billion.

China’s property sector has been reeling from government curbs on borrowing and declining home sales. A bond-market selloff has all but shut the market for new issuance, depriving developers of a crucial means of refinancing coming dollar debt.

Kaisa said it didn’t pay the principal and interest on a $400 million 6.5% note that matured on Dec. 7 and missed more than $105 million in overdue interest payments on three other bonds. Creditors haven’t demanded accelerated repayment yet, the company said.

The company said it had been in talks with bondholder representatives about “a comprehensive debt restructuring plan” covering its offshore bonds. It has hired restructuring specialist Houlihan Lokey Inc. as financial adviser, and the law firm Sidley Austin. Houlihan is also advising Evergrande and another developer that recently defaulted, Fantasia Holdings Group Co.

Kaisa is in talks with creditors holding a large chunk of its international debt, who are being advised by Lazard Ltd. , according to a person familiar with the matter. The bondholders have proposed a roughly $2 billion financing package to Kaisa with multiple options including equity rights, convertible bonds, bridge loans and other instruments, the person said.

Kaisa and Lazard have agreed to the terms of a nondisclosure agreement that would allow the investment bank to better assess the company’s cash shortfall, the person added, saying the agreement has yet to be signed.

The company’s contracted sales for November totaled just 1.01 billion yuan, the equivalent of $157 million. That is roughly 8% of the year-ago figure, when Kaisa reported 12.53 billion yuan of contracted sales, including sales generated with joint ventures and associates. “While the group continues to develop and sell properties in its ordinary course of business, the confidence of potential property purchases remains dampened in December,” it said.

Contracted sales reflect new contracts signed with home buyers and are more forward-looking than revenue, which is typically recorded when companies hand completed units over to purchasers.

Hong Kong-listed shares of Kaisa, which were halted the day after the $400 million bond was due, resumed trading and dropped 14% in morning trade Monday.

Several smaller developers such as Fantasia, Modern Land (China) Co. and Sinic Holdings Group Co. have defaulted in recent months. Earlier this month Fitch Ratings cut its assessment of Kaisa to a “restricted default” rating.

The People’s Bank of China cut banks’ reserve requirements earlier this month, a move some economists said could signal the start of an easing cycle. On Monday, the central bank made a modest cut to a key lending rate, the one-year loan prime rate, lowering it to 3.80% from 3.85%.

Partner-backed Sequoia Heritage beat its own target to triple investor capital in a decade

Sequoia Capital, one of Silicon Valley’s largest venture firms, has quietly built a $14bn fund to invest the wealth of its partners and start-up founders. Now the fund’s managers are offloading some of the high-flying tech companies that have made Sequoia wealthy.

Sequoia Heritage, started in 2010 with money from the venture firm’s partners, has ploughed the proceeds of the sales into new investments such as air filtration providers and opioid treatment clinics.

The trades, largely made in the past year-and-a-half, have nudged Heritage more into the spotlight after over a decade in the shadow of Sequoia’s venture capital funds, which made early investments in the likes of Apple, Google, Nvidia, Instagram and WhatsApp.

Heritage dumped its entire holding of more than 500,000 shares in the travel company Airbnb in the second quarter, and it has sold more than half of its stake in the game development company Unity since the company went public, according to filings. Both companies are also big winners for Sequoia’s venture funds.

At the same time, Heritage has moved deeper into private investments, such as the industrial holding company Madison Industries and an unnamed opioid treatment business backed by the private equity firm Shore Capital Partners.

Speaking publicly about the fund for the first time, Heritage’s head investors, Keith Johnson, 46, and Kevin Kelly, 31, told the Financial Times it aimed to triple investor capital over a decade. Johnson said it has beaten that target.

“The next, best investment has to be better than everything else we already own and better than everything else we’re seeing,” Kelly said.

Heritage, which shares a building with Sequoia Capital and operates as a separate legal entity, made returns of more than 73 per cent in the 12 months through June this year, said one person briefed on the numbers.

Some of the gains have come from early bets on new fund managers, including the former star T Rowe Price stock picker Henry Ellenbogen’s Durable Capital Partners, according to people familiar with the investments.

But Heritage has increasingly profited from direct investments that do not come from external managers.

One example is Veterinary Emergency Group, a private company that Heritage first backed when it had just two clinics in 2017. Investors recently valued the company at $1.5bn following a $100m financing.

The growth of Heritage has produced lucrative returns for Sequoia’s partners and their foundations, the biggest investors in the fund. It has also created a large pool of steady, fee-charging assets that could prove key to the future of Sequoia’s sprawling collection of interrelated businesses.

Some of Sequoia’s rivals, including Andreessen Horowitz, have held early conversations about creating similar funds, according to people familiar with the discussions. Andreessen has declined to comment on its plans.

Unlike similar wealth management funds, such as the McKinsey affiliate MIO Partners, Heritage also manages money for third-party investors — a decision that has allowed it to grow into a profitable standalone business.

Heritage began in 2010 with about $250m from outside investors and $150m each from Sequoia partners Michael Moritz and Doug Leone. Moritz viewed the fund as a vehicle for people in “Sequoia and the Sequoia circle” to manage their money while avoiding Wall Street wealth management firms, he said in an interview.

Heritage is structured as an open-ended fund, meaning it does not need to return money to investors by a certain date. The fund charges a flat fee for the assets it manages and does not add extra fees on performance gains, according to people familiar with the structure.

The fund has recently submitted a proposal allowing investors to pay reduced management fees in exchange for an additional performance fee, the people said.

Heritage’s co-heads said they did not aim to allocate assets evenly between different sectors. Instead, they would evaluate each new investment independently, aiming to find the highest returning assets.

“The world has come to believe assets in 2021 are worth what we thought they would have been worth in 2025 if the company performed flawlessly,” Kelly said.

Kelly said Heritage had looked to sell highly valued holdings at “2025 prices” and move the proceeds into areas where the firm was “leaning into the wind a little bit”.

Larry Gies, founder of Madison, said the company had grown “four-and-a-half fold” since Heritage first invested in 2020.

Heritage has invested more capital as the company has gone on a streak of acquisitions, including a $3.6bn purchase of Nortek’s custom air filtration business this year. Madison now made about $7bn in annual revenues, Gies said.

“It’s not the typical VC growth trajectory, but it’s really significant cash flow creation,” Gies said.

Heritage’s success partly hinges on the tight-knit community of venture capitalists and start-up founders that make up its investor base.

Heritage has invested in some of the biggest winners in Sequoia’s venture funds, including Stripe, the online payments company recently valued at $95bn. John Collison, a co-founder of Stripe, has also invested in Heritage and serves as a director of the firm’s advisory board, according to regulatory filings.

Johnson said the advisory board had “no participation in the day-to-day management of the business and no role in investment decision making”.

Heritage’s other investors have included former Google chief executive Eric Schmidt’s family foundation and large institutions such as the Oxford university endowment, according to their filings.

“Our job is to optimise the returns for the Heritage investors,” Johnson said, “as opposed to trying to enhance returns for Sequoia Capital.”

Boss of luxury business says market is ‘very challenging’ for independent companies

Italian luxury fashion company Zegna will go public in New York on Monday by combining with a US special purpose acquisition company for an expected enterprise value of $3.1bn.

The spac was launched by European private equity group Investindustrial and is chaired by former UBS chief executive Sergio Ermotti. Its deal with Zegna was first reported by the FT in July and initially valued the combined company at $3.2bn.

“We are very proud to be the first Italian fashion company to be listed in New York,” said Gildo Zegna, the third generation of the family to run the company since its founding in 1910, in an interview at Zegna’s Manhattan flagship store on the Friday before the listing.

The listing will deliver gross proceeds of $761m to invest in Zegna and Thom Browne, another brand it controls. It also opens the door to additional acquisitions. The Zegna family will own a nearly 66 per cent stake in the combined company.

There has been a wave of consolidation in the luxury industry. Deals in the past 12 months include LVMH’s purchase of Tiffany & Co, Etro and Off-White; Kering has bought Danish eyewear maker Lindberg and Richemont acquired leather goods brand Delvaux.

In 2019, Zegna told the FT he had no interest in taking the company public. But the pandemic has made it difficult for independent brands to compete with larger, cash-rich fashion conglomerates.

In 2020, sales at Zegna dropped 23 per cent from the year before to €1bn and it swung to a net loss of €45m, from a profit of €38m. In an investor presentation, the company forecast that its performance would recover to near pre-pandemic levels in 2021.

“The market of luxury is very challenging,” Zegna said. “We are competing with conglomerates. [We did it] to get stronger.”

“Now I can rely on additional resources . . . to take our shot if we have another [acquisition] opportunity, and I think I can tell you we have other opportunities.”

Zegna said he was most keen to buy more of the company’s suppliers, but would also look at other fashion brands. “As raw materials are getting scarce [and] expensive, as there is stress to the supply chain regardless of where you are, to control [the supply chain] is very, very important strategically,” he said. If there are opportunities to buy suppliers “we are going to do it”, he added.

The company also wants to concentrate on organic growth in its menswear business, which in recent years has shifted away from suits to luxury leisurewear as workplaces have become more casual.

Zegna himself no longer wears suits in interviews; meeting the FT, he wore a thick cashmere overshirt over a thin polo neck, stretchy knit trousers, all in shades of grey, and a pair of Zegna trainers. “We’ve transformed the perception of the brand from a tailored luxury brand into a sportswear luxury brand. I used to wear a nice suit and tie . . . but once you start wearing this stuff, you become addicted.”

The company is also planning to invest further in its textile business — it supplies fabrics to rivals including Chanel and Tom Ford — and in Thom Browne, which it bought for $500m in 2018 and has since expanded into women’s and childrenswear.

Last week, it unveiled a new name and logo, dropping its founder’s name Ermenegildo from Ermenegildo Zegna.

Gildo, who is 66, said he feels he has “to serve for another few years”.

“The next generation is stepping up. I’ve got three good fellows in the fourth generation. One is marketing, [my oldest son] Edo . . . Angelo, the younger one, who is head of Zegna retail America . . . And then Francesco, my nephew, is head of retail in Europe. So, who knows?”