HNA Group is a massive Chinese conglomerate that has stakes in all kinds of travel brands. This includes about a dozen Chinese airlines, as well as major international hotel brands, like Hilton and Carlson. While the company was investing like crazy, they’ve transitioned from rapid to moderate growth, and as a result have had trouble securing new financing. This has left them in a rough financial situation, where they’re now having to sell many of their assets.
To be honest, a lot of these mysterious Chinese conglomerates confuse the heck out of me. More specific to our travel world, the way Chinese airlines are set up largely confuses me. So I’ll stick to what we know, which is that HNA Group has been looking to disinvest in many of their companies, given that they’re in a bind. For example, HNA Group is trying to sell some or all of their 26.1% stake in Hilton.
On the airline front, HNA Group has stakes in Hainan Airlines, Tianjin Airlines, Beijing Capital Airlines, and others. For the past few months we’ve been hearing stories of major financial woes at Hainan Airlines, which is the biggest of those airlines. Earlier in the year there were reports that Hainan Airlines hadn’t paid their fuel bills, and that they owed $476 million to China National Aviation Fuel Group. That’s an insane amount.
Despite HNA Group’s financial problems, the airlines they’ve invested in mostly still have big growth plans, with billions of dollars worth of planes on order. Unfortunately it seems like they’re having a hard time financing new planes at this point.
Reuters reports that HNA Group airlines have delayed payments for several months of new planes, and Airbus has had enough. Rather than stepping in to finance the aircraft, Airbus is holding onto brand new A330s (worth over one billion USD) until HNA Group can pay for them. According to the story:
“After six months of talks, Airbus took the decision to withdraw the planes as it does not want to play the financier.”
This situation came to light after journalists noted at least five Airbus A330s belonging to HNA Group parked at Airbus’ delivery center in Toulouse during the A220 launch earlier this week. That’s more planes than you’d usually expect to see parked at the airport belonging to a particular airline.
I guess we’ll find out soon enough how this is resolved. I can’t imagine Airbus wants these planes parked there all that much longer, so we’ll see if Airbus and HNA Group can come up with a financing solution, or if these planes just don’t end up going to HNA Group.
I expect we’ll see some rough times ahead for HNA Group airlines…
(Featured image courtesy of Konstantin von Wedelstaedt)
China Corp debt to pick up some AS miles
HNA Offers Airline Vouchers to Repay Investors Instead of Cash https://www.bloomberg.com/news/articles/2018-11-14/hna-offers-airline-vouchers-to-repay-investors-instead-of-cash
Buying China corp debt to covert for airline tickets would be an interesting pickup of AS miles.
HNA owns 49% of the french airline Aigle Azur. This airline flies A330 between Paris (ORY) and Sao Paulo (VCP). Ben, as a flyer would is always fascinated by odd airlines and route I think that would be interesting to read a review of this airline on that flight.
They also fly between ORY and PEK but the flight to VCP seems more interesting !
The rumors said that the Vice President Mr. Wang, the supreme leader’s loyal deputy, is the true stakeholder of the HNA group. The HNA group as a “private company” has outgrown all its big three national airlines in China with unlimited capital access that no other Chines private company has. And yet, nobody knows the structural setup and shareholders....one time it was reported that the HNA group was controlled by a charity foundation voluntarily managed...
The rumors said that the Vice President Mr. Wang, the supreme leader’s loyal deputy, is the true stakeholder of the HNA group. The HNA group as a “private company” has outgrown all its big three national airlines in China with unlimited capital access that no other Chines private company has. And yet, nobody knows the structural setup and shareholders....one time it was reported that the HNA group was controlled by a charity foundation voluntarily managed by an Indian guy. So you get the picture!
If I were you, Lucky, I would never have a frequent flier account with Hainan Airlines, or if you have accumulated points with it, you should cash out.
I read recently that the chairman of this company 'slipped' and suffered a fatal head wound. What a bunch of nonsense these people are-I am willing to pay more with the tariffs.
Also their founder and co-chairman fell to his death last week while "trying to take a picture" on vacation in France. Really suspect if you ask me, given the turmoil the company is going through.