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KarelXWB
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HNA's financial woes

Wed Dec 06, 2017 10:21 am

What's going on at HNA Group?

Airlines owned by Chinese conglomerate HNA Group have missed payments due on leased aircraft, the chief executive of lessor Aergo Capital has told industry publication FlightGlobal.

HNA had “stopped paying – via their owned airline subsidiaries – some lessors for leased jets for the past two to three months,” Aergo CEO Fred Browne was quoted as saying.

“We only have one aircraft exposed, but I know others have a lot more,” Browne told FlightGlobal. “If those lessors turn around and say ‘no more’ and pull those aircraft out, that could truly shake the market.”


Article
https://www.reuters.com/article/us-hnag ... SKBN1DZ33G
Last edited by atcsundevil on Thu Mar 01, 2018 1:48 am, edited 1 time in total.
Reason: Title updated
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readytotaxi
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Re: HNA's airlines miss lease payments

Wed Dec 06, 2017 11:03 am

"sorry we forgot, the cheque is in the post" :rotfl:

Seriously, what is going on here?
What has HNA bought?

Biggest shareholder in Deutsche Bank
A 25% stake in hotel group Hilton
Airport services firm Swissport Group
Carlson Hotels, which runs the Radisson hotel chain
Airline catering firm Gate Gourmet
Irish aircraft leasing firm Avolon Holdings
http://www.bbc.co.uk/news/business-40170442
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MalevTU134
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Re: HNA's airlines miss lease payments

Wed Dec 06, 2017 11:17 am

Hang on...so they own an aircraft leasing firm...and lease from others, whom they don't pay?
 
PanHAM
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Re: HNA's airlines miss lease payments

Wed Dec 06, 2017 11:20 am

Didn't they buy Hahn Airport this year? Well, they did actually and that new developent might have some political Dynamite in the state of RLP
Was Erlauben Erdogan!!!
 
BestWestern
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Re: HNA's airlines miss lease payments

Wed Dec 06, 2017 11:27 am

Nothing new here... HNA is constantly late in airport payments too. The company is borrowing to pay interest these days.

This was discussed in another thread on HNA recently.
Greetings from Hong Kong.... a subsidiary of China Inc.
 
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enilria
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Re: HNA's airlines miss lease payments

Wed Dec 06, 2017 11:37 am

There's a news story they will sell non-core assets. How'd they collapse so fast?

https://nyti.ms/2nxK8cX
 
aircanadaa330
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Re: HNA's airlines miss lease payments

Wed Dec 06, 2017 11:53 am

are they not profitable?

or are they wasting their money on useless stuff.
Cheers;
 
zakuivcustom
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Re: HNA's airlines miss lease payments

Wed Dec 06, 2017 1:06 pm

aircanadaa330 wrote:
are they not profitable?

or are they wasting their money on useless stuff.


It is more like they used asset to finance buying additional asset, then in turn, use those asset to finance more. In another word, they borrow big to spend big. Works until regulator start taking a closer look at their dealings and saw that their source of money to begin with is not even clear (It is China, so I am personally betting 99% that it is some sort of money laundering to start with).

The Group itself is still profitable, but basically nobody is going to give them additional money right now to continue their spending spree. It is a matter of time before one of the domino falls and bring the whole group down imo anyway.
 
raylee67
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Re: HNA's airlines miss lease payments

Wed Dec 06, 2017 1:27 pm

zakuivcustom wrote:
aircanadaa330 wrote:
are they not profitable?

or are they wasting their money on useless stuff.


It is more like they used asset to finance buying additional asset, then in turn, use those asset to finance more. In another word, they borrow big to spend big. Works until regulator start taking a closer look at their dealings and saw that their source of money to begin with is not even clear (It is China, so I am personally betting 99% that it is some sort of money laundering to start with).

The Group itself is still profitable, but basically nobody is going to give them additional money right now to continue their spending spree. It is a matter of time before one of the domino falls and bring the whole group down imo anyway.

It has borrowed like crazy to finance purchases using what they owned. And to facilitate the purchases quickly, they borrowed extremely short term bridge loans to get the deal closed first. It's not just all those companies that they have bought. They have invested a lot in properties and even empty plots of land. Last year, they broke the local record in Hong Kong (which has the most expensive property price in the world) on a piece of residential land. They made the purchase with a 6-month loan from the banks. The term of the loan is up this month and they could not repay. Instead, they negotiated an extended bridge loan (for 6 more months) with substantially increased interest rate. And now the news is that they are trying to sell the land (along with some other properties around the world).

If they can't even pay the lease for their aircraft, it's really bad. That money is peanuts compare to the loans they need to repay the lenders for all those purchases.
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airbazar
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Re: HNA's airlines miss lease payments

Wed Dec 06, 2017 1:50 pm

zakuivcustom wrote:
The Group itself is still profitable,

A mere technicality. If they can't pay their bills, it's not that difficult to be "profitable". In those terms I could be a millionaire in just a few months. Imagine if took all my income for myself and never paid my mortgage, car loan, credit card bill, etc...
 
thepinkmachine
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Re: HNA's airlines miss lease payments

Wed Dec 06, 2017 2:12 pm

Looks like the bubble is bursting. Is it only them, or will there be a chain reaction?
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yonahleung
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Re: HNA's airlines miss lease payments

Wed Dec 06, 2017 3:02 pm

Seems like the group can be both profitable and insolvent (in both the balance sheet sense and cashflow sense)
 
aircanadaa330
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Re: HNA's airlines miss lease payments

Wed Dec 06, 2017 3:28 pm

raylee67 wrote:
zakuivcustom wrote:
aircanadaa330 wrote:
are they not profitable?

or are they wasting their money on useless stuff.


It is more like they used asset to finance buying additional asset, then in turn, use those asset to finance more. In another word, they borrow big to spend big. Works until regulator start taking a closer look at their dealings and saw that their source of money to begin with is not even clear (It is China, so I am personally betting 99% that it is some sort of money laundering to start with).

The Group itself is still profitable, but basically nobody is going to give them additional money right now to continue their spending spree. It is a matter of time before one of the domino falls and bring the whole group down imo anyway.

It has borrowed like crazy to finance purchases using what they owned. And to facilitate the purchases quickly, they borrowed extremely short term bridge loans to get the deal closed first. It's not just all those companies that they have bought. They have invested a lot in properties and even empty plots of land. Last year, they broke the local record in Hong Kong (which has the most expensive property price in the world) on a piece of residential land. They made the purchase with a 6-month loan from the banks. The term of the loan is up this month and they could not repay. Instead, they negotiated an extended bridge loan (for 6 more months) with substantially increased interest rate. And now the news is that they are trying to sell the land (along with some other properties around the world).

If they can't even pay the lease for their aircraft, it's really bad. That money is peanuts compare to the loans they need to repay the lenders for all those purchases.



sounds like they should just sell off some assets
Cheers;
 
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readytotaxi
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Re: HNA's airlines miss lease payments

Wed Dec 06, 2017 3:36 pm

I would imagine some stock market traders are already on to this, the moment the first aircraft is reposesed there will be a run on the company.
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727200
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Re: HNA's airlines miss lease payments

Wed Dec 06, 2017 3:45 pm

This form of 'capital financing' only works in 'up' market and you need great timing or sources with deep pockets. If not, those expensive bridge loans come due and you caught out on a limb that has been cut off. Sounds like the finance guys are taking lessons from Gordon Gekko
 
zakuivcustom
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Re: HNA's airlines miss lease payments

Wed Dec 06, 2017 3:47 pm

raylee67 wrote:
zakuivcustom wrote:
aircanadaa330 wrote:
are they not profitable?

or are they wasting their money on useless stuff.


It is more like they used asset to finance buying additional asset, then in turn, use those asset to finance more. In another word, they borrow big to spend big. Works until regulator start taking a closer look at their dealings and saw that their source of money to begin with is not even clear (It is China, so I am personally betting 99% that it is some sort of money laundering to start with).

The Group itself is still profitable, but basically nobody is going to give them additional money right now to continue their spending spree. It is a matter of time before one of the domino falls and bring the whole group down imo anyway.

It has borrowed like crazy to finance purchases using what they owned. And to facilitate the purchases quickly, they borrowed extremely short term bridge loans to get the deal closed first. It's not just all those companies that they have bought. They have invested a lot in properties and even empty plots of land. Last year, they broke the local record in Hong Kong (which has the most expensive property price in the world) on a piece of residential land. They made the purchase with a 6-month loan from the banks. The term of the loan is up this month and they could not repay. Instead, they negotiated an extended bridge loan (for 6 more months) with substantially increased interest rate. And now the news is that they are trying to sell the land (along with some other properties around the world).

If they can't even pay the lease for their aircraft, it's really bad. That money is peanuts compare to the loans they need to repay the lenders for all those purchases.


I forgot about that HK land purchase also (I've tons of relatives over there, so I know full well how ridiculous stuff are over there right now). Of course, it doesn't help that Mainland Chinese banks are now clamp by the central government to not let people borrow money just to buy stuff oversea, which was what HNA Group was doing.

Speaking of HNA Group in general, HX had been throwing out ridiculous fare to everywhere from HKG for awhile, I've always wonder how they survived that long to begin with anyway :rotfl:
 
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hongkongflyer
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Re: HNA's airlines miss lease payments

Wed Dec 06, 2017 4:03 pm

zakuivcustom wrote:
raylee67 wrote:
zakuivcustom wrote:

It is more like they used asset to finance buying additional asset, then in turn, use those asset to finance more. In another word, they borrow big to spend big. Works until regulator start taking a closer look at their dealings and saw that their source of money to begin with is not even clear (It is China, so I am personally betting 99% that it is some sort of money laundering to start with).

The Group itself is still profitable, but basically nobody is going to give them additional money right now to continue their spending spree. It is a matter of time before one of the domino falls and bring the whole group down imo anyway.

It has borrowed like crazy to finance purchases using what they owned. And to facilitate the purchases quickly, they borrowed extremely short term bridge loans to get the deal closed first. It's not just all those companies that they have bought. They have invested a lot in properties and even empty plots of land. Last year, they broke the local record in Hong Kong (which has the most expensive property price in the world) on a piece of residential land. They made the purchase with a 6-month loan from the banks. The term of the loan is up this month and they could not repay. Instead, they negotiated an extended bridge loan (for 6 more months) with substantially increased interest rate. And now the news is that they are trying to sell the land (along with some other properties around the world).

If they can't even pay the lease for their aircraft, it's really bad. That money is peanuts compare to the loans they need to repay the lenders for all those purchases.


I forgot about that HK land purchase also (I've tons of relatives over there, so I know full well how ridiculous stuff are over there right now). Of course, it doesn't help that Mainland Chinese banks are now clamp by the central government to not let people borrow money just to buy stuff oversea, which was what HNA Group was doing.

Speaking of HNA Group in general, HX had been throwing out ridiculous fare to everywhere from HKG for awhile, I've always wonder how they survived that long to begin with anyway :rotfl:


It was HX's 11th birthday sale
 
ExDubai
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Re: HNA's airlines miss lease payments

Wed Dec 06, 2017 5:59 pm

aircanadaa330 wrote:
raylee67 wrote:
zakuivcustom wrote:

It is more like they used asset to finance buying additional asset, then in turn, use those asset to finance more. In another word, they borrow big to spend big. Works until regulator start taking a closer look at their dealings and saw that their source of money to begin with is not even clear (It is China, so I am personally betting 99% that it is some sort of money laundering to start with).

The Group itself is still profitable, but basically nobody is going to give them additional money right now to continue their spending spree. It is a matter of time before one of the domino falls and bring the whole group down imo anyway.

It has borrowed like crazy to finance purchases using what they owned. And to facilitate the purchases quickly, they borrowed extremely short term bridge loans to get the deal closed first. It's not just all those companies that they have bought. They have invested a lot in properties and even empty plots of land. Last year, they broke the local record in Hong Kong (which has the most expensive property price in the world) on a piece of residential land. They made the purchase with a 6-month loan from the banks. The term of the loan is up this month and they could not repay. Instead, they negotiated an extended bridge loan (for 6 more months) with substantially increased interest rate. And now the news is that they are trying to sell the land (along with some other properties around the world).

If they can't even pay the lease for their aircraft, it's really bad. That money is peanuts compare to the loans they need to repay the lenders for all those purchases.



sounds like they should just sell off some assets


And the potential buyers will love it.....
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Planesmart
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Re: HNA's airlines miss lease payments

Wed Dec 06, 2017 6:01 pm

Don't be surprised if the leasing company with a single aircraft exposure, doesn't get taken out of the equation by those with more aircraft on lease.
 
zizou
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Re: HNA's airlines miss lease payments

Fri Dec 08, 2017 3:30 pm

How will this affect Virgin Australia? they are part owned by HNA
 
Cunard
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Re: HNA's airlines miss lease payments

Fri Dec 08, 2017 9:43 pm

zizou wrote:
How will this affect Virgin Australia? they are part owned by HNA


Your obviously looking at this from an Australian angle but the HNA Group have interests throughout the world and many companies would be affected not just Virgin Australia so the same question could be asked for example 'what would happen to Swissport'. But know one knows that answer as the company is still trading and any non core interests will probably be sold off which in my opinion isn't a bad thing as I've always thought that the HNA Group had overstretched its business empire over the last few years with some of their associated companies in my opinion being better off without any involvement from the HNA Group.
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eamondzhang
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Re: HNA's airlines miss lease payments

Fri Dec 08, 2017 10:30 pm

From my source the airline ops are still profitable, but it's the parent company who took the cash off the airlines' hands for their own investments (and repayments) that are causing troubles for airlines when trying to catch up with all the payments.

There's also a saying that HNA group, although officially named Hainan Airlines Group, has a core business in housing developments rather than airlines. Airlines is only their "secondary business", and that's before they started investing like hell overseas.

Michael
 
Waterbomber
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Re: HNA's airlines miss lease payments

Sat Dec 09, 2017 8:59 am

I always said that there is something very fishy about this holding.
 
345tas
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Re: HNA's airlines miss lease payments

Sat Dec 09, 2017 9:20 am

This reminds me to buy travel insurance (with bankruptcy protection) for upcoming Hainan trip.
 
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Siren
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Re: HNA's airlines miss lease payments

Sat Dec 09, 2017 12:12 pm

eamondzhang wrote:
From my source the airline ops are still profitable, but it's the parent company who took the cash off the airlines' hands for their own investments (and repayments) that are causing troubles for airlines when trying to catch up with all the payments.


If this is true, then this issue would be nothing more than a short-term liquidity crisis. Management purchased something they shouldn't have, putting them in a situation where they are too cash poor to cover day to day operating expenses - is that the situation? If that's the case, assuming they're able to pull through this issue, the company should survive - if management is able to learn from their mistakes... but leveraging so much short term debt at outrageously high interest rates, and paying it off with other debt is essentially 'loan kiting' - a legal, but eventually unsustainable way to do business, that always eventually results in bankruptcy.
 
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LAX772LR
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Re: HNA's airlines miss lease payments

Sat Dec 09, 2017 8:17 pm

Cunard wrote:
zizou wrote:
How will this affect Virgin Australia? they are part owned by HNA
Your obviously looking at this from an Australian angle but the HNA Group have interests throughout the world and many companies would be affected not just Virgin Australia so the same question could be asked for example 'what would happen to Swissport'.

Um, the question asked was how does this affect VA; which is a perfectly legitimate inquiry, and is in no way invalidated by the fact that others would be affected as well. What an odd response. :irked:

Anyway, to ANSWER the question:
It's tough to say at this point... as it could just as easily work out in VA's favor, if another airline with whom they have a closer interactive relationsip (e.g. DL) were willing to similarly invest. Or, it could be adverse. Or it could maintain the status quo if HNA divests other assets but maintains this stake.

Only time will tell.
I myself, suspect a more prosaic motive... ~Thranduil
 
eamondzhang
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Re: HNA's airlines miss lease payments

Sat Dec 09, 2017 11:04 pm

Siren wrote:
eamondzhang wrote:
From my source the airline ops are still profitable, but it's the parent company who took the cash off the airlines' hands for their own investments (and repayments) that are causing troubles for airlines when trying to catch up with all the payments.


If this is true, then this issue would be nothing more than a short-term liquidity crisis. Management purchased something they shouldn't have, putting them in a situation where they are too cash poor to cover day to day operating expenses - is that the situation? If that's the case, assuming they're able to pull through this issue, the company should survive - if management is able to learn from their mistakes... but leveraging so much short term debt at outrageously high interest rates, and paying it off with other debt is essentially 'loan kiting' - a legal, but eventually unsustainable way to do business, that always eventually results in bankruptcy.

They're indeed in trouble for their buying activities overseas - rumours saying that they'll be forced to sell of some assets they recently acquired, namely Hilton.

I agree this is not sustainable, but look from HNA's typical management style I'm not surprised by what they've done.

Michael
 
81819
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Re: HNA's airlines miss lease payments

Sun Dec 10, 2017 1:07 am

I think HNA have been buying assets that earn incomes in either US or EU currencies.

The rational probably revolves around hedging the business through transferring US held currencies into US or EU based assets.

In Australia there were a few reports about the opaque nature of HNA and who actually owns them. The general consensus revolved around the group being a holding company for various finance, government and privately owned institutions wanting to offload US dollars / excess capital.

As such, HNA is probably an enigma. Not because the business model they use is some sort of scam, but because institutions of this type are not normally in the public eye.

With the Chinese economy growing by double digit amounts, I think HNA will trade their way out of this situation.
 
LJ
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Re: HNA's airlines miss lease payments

Sun Dec 10, 2017 8:52 am

Planesmart wrote:
Don't be surprised if the leasing company with a single aircraft exposure, doesn't get taken out of the equation by those with more aircraft on lease.


Yet it will create a default which means its credit score will go down the drain (and make it even harder to finance).

Siren wrote:
If this is true, then this issue would be nothing more than a short-term liquidity crisis.


I fear it's more than a short-term issue. The Chinese government doesn't like companies investing all their money outside China. Moreover, the questions about the company structure and its shareholders will have an effect in companies providing funding towards the company. Finally, profitability doesn't say anything as profits can be manipulated easily. The only thing that counts is cash and the companies ability to get short and long term funding. In that respect any default on a loan or lease would place HNA's reaction to its downgrade by S&P two weeks ago in perspective.
 
sq256
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Re: HNA's airlines miss lease payments

Tue Dec 12, 2017 2:30 pm

LAX772LR wrote:
Cunard wrote:
zizou wrote:
How will this affect Virgin Australia? they are part owned by HNA
Your obviously looking at this from an Australian angle but the HNA Group have interests throughout the world and many companies would be affected not just Virgin Australia so the same question could be asked for example 'what would happen to Swissport'.

Um, the question asked was how does this affect VA; which is a perfectly legitimate inquiry, and is in no way invalidated by the fact that others would be affected as well. What an odd response. :irked:

Anyway, to ANSWER the question:
It's tough to say at this point... as it could just as easily work out in VA's favor, if another airline with whom they have a closer interactive relationsip (e.g. DL) were willing to similarly invest. Or, it could be adverse. Or it could maintain the status quo if HNA divests other assets but maintains this stake.

Only time will tell.


One of the primary reasons for HNA investing in Virgin Australia is to gain access to the HKG-SYD/BNE/MEL slots, since the AUS-HKG bilateral on the HKG has been maxed out from the 3 major cities. Unless if either other government is willing to come to the table to negotiate (keeping in mind the nasty Jetstar HK issues earlier), the bilateral isn't likely to be changed anytime soon. Basically HNA is partially subsidising VA's MEL-HKG flights, as VA would've not entered this route on their own (or under the former ownership structure).
 
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aemoreira1981
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Re: HNA's airlines miss lease payments

Wed Dec 13, 2017 2:54 am

HNA needs to realize the lessons from the SAirGroup in its final days. It should focus on being an airline first as well as JVs with other airlines. The hotels should be the first business to be sold. The other issue is how this might affect Avolon. Might a sale of Avolon's dry-leasing assets to other leasing firms also be in the offing (i.e., GECAS, Macquarie Bank, Wells Fargo Bank, AerCap, Bank of China, ICBC)?

Also, curious: how many HNA Group planes have Avolon as the lessor?
 
eamondzhang
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Re: HNA's airlines miss lease payments

Fri Dec 15, 2017 11:50 am

Current rumour has HNA pays its December employees salaries at 80% of its supposed amount. Sounds like a huge cash flow crisis right there and if HNA's around, it may be nationalised sooner or later.

Michael
 
Kashmon
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Re: HNA's airlines miss lease payments

Fri Dec 15, 2017 12:57 pm

eamondzhang wrote:
Current rumour has HNA pays its December employees salaries at 80% of its supposed amount. Sounds like a huge cash flow crisis right there and if HNA's around, it may be nationalised sooner or later.

Michael


Will be hilarious to see all the HX pilots who jumped from CX without a job.

Considering CX has barely expanded- it looks like it is betting its strategy on HX massively downsizing due to aircraft reposession
same with CA...

China needs to stop Nationalizing failed companies- they have failed- allow the successful ones or new ones to jump in- better for consumer and businesses
 
zakuivcustom
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Re: HNA's airlines miss lease payments

Fri Dec 15, 2017 1:19 pm

Kashmon wrote:
eamondzhang wrote:
Current rumour has HNA pays its December employees salaries at 80% of its supposed amount. Sounds like a huge cash flow crisis right there and if HNA's around, it may be nationalised sooner or later.

Michael


Will be hilarious to see all the HX pilots who jumped from CX without a job.

Considering CX has barely expanded- it looks like it is betting its strategy on HX massively downsizing due to aircraft reposession
same with CA...

China needs to stop Nationalizing failed companies- they have failed- allow the successful ones or new ones to jump in- better for consumer and businesses


Or CX can just buy HX along with UO if the price is right. Doubt HX itself is losing that much money. UO is certainly making money even with their operational "crisis" (that is way overhype imo).

Things are not looking for HNA lately, though. When you keep need to "reassure" investor, literally begging the banks for more money, and now the underpaying rumor.

https://mobile.nytimes.com/2017/12/14/b ... banks.html

Sums up HNA woe in general. Even if they sell asset, it will be at a loss just bc they way overspend buying those asset to begin with (reason why those asset were sold in the first place - if you have somebody knocking on your door, paying $10 for something that is only worth $2, you sell and laugh all the way to the bank :white: )
 
Kashmon
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Re: HNA's airlines miss lease payments

Fri Dec 15, 2017 2:11 pm

I highly doubt HX is making any money or UO
If HX can make money by running a full service airline with its LCC fares, all other CEO's one earth need to go to HX for training!!

500 dollar ( NZD) return fares HKG- AKL .
HNA's fares are ridiculous as well

surely at some point it has to all collapse
I bet CA is salivating - the death of HNA will make it the biggest beneficiary and indirectly see its stock in CX double ( Swire ain't selling long term anyway)
 
JustSomeDood
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Re: HNA's airlines miss lease payments

Fri Dec 15, 2017 2:11 pm

So HX finally has enough routes long-haul to be a somewhat decent alternative to CX ex-HKG and now its parent company is defaulting on payments? Sigh :cry:
 
Kashmon
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Re: HNA's airlines miss lease payments

Fri Dec 15, 2017 2:14 pm

JustSomeDood wrote:
So HX finally has enough routes long-haul to be a somewhat decent alternative to CX ex-HKG and now its parent company is defaulting on payments? Sigh :cry:



that is how it got there in the first place

borrowed planes + ridiculous fares.
if they charged the same as CX they would be nothing
eventually u have to pay for the planes

of course they will die- hence CX has not really been worried or responded to them like they did to BA/QF/KA
or CA about HNA

Also 3 Long haul routes with their limited regional network with almost no frequencies is cute- but not a decent alternative

Asiana is a decent alternative to KE
HX is not for CX
 
zakuivcustom
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Re: HNA's airlines miss lease payments

Fri Dec 15, 2017 2:27 pm

Kashmon wrote:
I highly doubt HX is making any money or UO
If HX can make money by running a full service airline with its LCC fares, all other CEO's one earth need to go to HX for training!!

500 dollar ( NZD) return fares HKG- AKL .
HNA's fares are ridiculous as well

surely at some point it has to all collapse
I bet CA is salivating - the death of HNA will make it the biggest beneficiary and indirectly see its stock in CX double ( Swire ain't selling long term anyway)


To be fair, their cost base is definitely lower than CX. HX and UO still get to enjoy paying people nothing just b/c they're still "new" enough anyway (Plus Chinese labor cost is still lower, and it's definitely lower compare to Hong Kong).

Not to mention, unlike CX, HNA didn't put all their money into fuel hedge and lost millions :white: :white: :D

On the other hand, yes, without their ridiculous fare they won't even get this much market share anyway. On the other hand, as a customer, I certainly enjoyed those 1300HKD fare from HK to South Korea or Japan :rotfl:
 
hz747300
Posts: 2417
Joined: Thu Mar 11, 2004 11:38 pm

Re: HNA's airlines miss lease payments

Fri Dec 15, 2017 2:59 pm

CX lost billions in a fuel hedge. I flew HX home for the holidays at HK$21k r/t Biz Class to Vancouver. A lie flat seat, not the greatest choices on IFE, and truly top notch service from the flight attendants. The captain in his announcements had a slight Singaporean accent, and made a few grammatical errors in his announcements, but overall I would say it was a good flight.

I think HX's costs are lower, and empty seats make no revenue.

They keep launching routes and receiving A350s so it'll be interesting to see what next couple of years bring for HX. It seems they are actively recruiting CX Second Officers at the moment to become First Officers at HX.
Keep on truckin'...
 
Kashmon
Posts: 642
Joined: Thu Dec 04, 2014 8:08 am

Re: HNA's airlines miss lease payments

Fri Dec 15, 2017 8:25 pm

I doubt HX costs are significantly lower, CX has scale, generating a lot more efficiencies. Not to mention everything CX does is in house ( swire) not third party.

As for the first officers, if they think going to a about to be bankrupt airline is wise, I question their ability to make sound judgements!!

cathay has not incorporated the fuel hedge loss into its pricing, also in spite of higher fares their passenger traffic grew 6 percent in October.

Regardless CX does not seem to think HX is a threat other wise they would have aggressively responded as they usually do ( think HKG-LHR where they drove out most of the competition)

Same with CA
CA also could have aggressively responded to HNA but they see that their plan can't
sustain itself.
 
zkncj
Posts: 3915
Joined: Wed Nov 09, 2005 4:57 pm

Re: HNA's airlines miss lease payments

Fri Dec 15, 2017 8:34 pm

Have they been spending all there money trying to bailout Virgin Australia? One of the main reasons NZ should there shareholding to HNA was that they didn't want to poor any more cash into an failing airline that keeps bleeding money.

Do wonder what is next for VA then? EH isn't really in an place to help VA out anymore too, SQ seems to be very in quite and maybe ready to jump while they can?
 
winginit
Posts: 3053
Joined: Sat Feb 23, 2013 9:23 pm

Re: HNA's airlines miss lease payments

Fri Dec 15, 2017 8:42 pm

Kashmon wrote:
surely at some point it has to all collapse
I bet CA is salivating - the death of HNA will make it the biggest beneficiary and indirectly see its stock in CX double ( Swire ain't selling long term anyway)


Not just CA but likely the whole CAAC. They've punished HU for being the only "private" mainland Chinese carrier over the years by way of route authorities and the like, and I have to imagine they'd pounce on HU's assets and distribute (favoring CA of course) given HU still has an influential but not majority provincial government ownership stake.
 
eamondzhang
Posts: 1877
Joined: Thu Sep 23, 2010 8:23 am

Re: HNA's airlines miss lease payments

Fri Dec 15, 2017 10:42 pm

winginit wrote:
Kashmon wrote:
surely at some point it has to all collapse
I bet CA is salivating - the death of HNA will make it the biggest beneficiary and indirectly see its stock in CX double ( Swire ain't selling long term anyway)


Not just CA but likely the whole CAAC. They've punished HU for being the only "private" mainland Chinese carrier over the years by way of route authorities and the like, and I have to imagine they'd pounce on HU's assets and distribute (favoring CA of course) given HU still has an influential but not majority provincial government ownership stake.

Except they won't default - for now anyway.

Eight major banks in China has supported HNA - well that's what they said anyway.

News in English: https://www.ft.com/content/1cddf132-e09 ... 1e63a52f9c

Michael
 
User avatar
Channex757
Posts: 2417
Joined: Sat Jun 18, 2016 7:07 am

Re: HNA's airlines miss lease payments

Sat Dec 16, 2017 1:29 am

eamondzhang wrote:
From my source the airline ops are still profitable, but it's the parent company who took the cash off the airlines' hands for their own investments (and repayments) that are causing troubles for airlines when trying to catch up with all the payments.

There's also a saying that HNA group, although officially named Hainan Airlines Group, has a core business in housing developments rather than airlines. Airlines is only their "secondary business", and that's before they started investing like hell overseas.

Michael

For those who like to deep dive and are into conspiracy theories

https://www.forbes.com/sites/nathanvard ... ed2c05296c

Go read it there; I'm not going to repeat any allegations on this site but the implications are worth looking at when studying how HNA Group has exploded into a deal machine.
 
eamondzhang
Posts: 1877
Joined: Thu Sep 23, 2010 8:23 am

Re: HNA's airlines miss lease payments

Sun Dec 17, 2017 9:23 am

Newest rumour field news is an unnamed Mainland China airline is offering 10 each of brand new 737 and A320neo for immediate resale (below their acquisition price). It is highly speculated that the airline is HNA and some of its subsidiaries.

Another desperate effort in getting some cash in hand.

Michael
 
BestWestern
Posts: 8358
Joined: Fri Sep 08, 2000 8:46 pm

Re: HNA's airlines miss lease payments

Sun Dec 17, 2017 11:30 am

The issue is that HNA group has overpaid for their assets, so sale of them won’t pay down all the debt. Zero sum game.
Greetings from Hong Kong.... a subsidiary of China Inc.
 
Obzerva
Posts: 501
Joined: Wed Jan 11, 2017 3:48 am

Re: HNA's airlines miss lease payments

Sun Dec 17, 2017 11:43 am

zkncj wrote:
Have they been spending all there money trying to bailout Virgin Australia? One of the main reasons NZ should there shareholding to HNA was that they didn't want to poor any more cash into an failing airline that keeps bleeding money.

Do wonder what is next for VA then? EH isn't really in an place to help VA out anymore too, SQ seems to be very in quite and maybe ready to jump while they can?


No they haven’t, the money spent on VA is an insignificant amount compared to the total of the HNA group.

PS do you deliberately not learn Etihad’s code? I’ve seen you corrected on it before.
 
BestWestern
Posts: 8358
Joined: Fri Sep 08, 2000 8:46 pm

Re: HNA's airlines miss lease payments

Sun Dec 17, 2017 11:50 am

Virgin is expected to do better thanks to an improvement in the Australian economy.

However, HNA overpaid for its shareholding. If they sell it, they will lose money.

Buying stuff is easy - when you have a blank chequebook.
Greetings from Hong Kong.... a subsidiary of China Inc.
 
sq256
Posts: 296
Joined: Sun Jul 18, 2010 10:37 am

Re: HNA's airlines miss lease payments

Sun Dec 17, 2017 11:57 am

One of the primary reasons of HNA investing in VA is to gain access to the HK-SYD/BNE/MEL route as the bilateral is maxed out on HK's end, thus their subsidy in VA is for them to operate the HK-MEL route on HNA's behalf (and provide some multilingual FAs). In addition to this is also expanding their Oz portfolio to SYD and BNE (via VA) through slot trading (as they did for MEL-HKG).

With a less than 20% stake (with Nanshan holding the other 20%), and the "HNA group" through HK Airlines/Express basically being the "Virgin Australia" of HK themselves (or the "Etihad" of HK) through acquiring/overpaying for assets, they are basically content with and/or aren't willing to expand their current minority stake.
 
sq256
Posts: 296
Joined: Sun Jul 18, 2010 10:37 am

Re: HNA's airlines miss lease payments

Sun Dec 17, 2017 1:37 pm

zkncj wrote:
H One of the main reasons NZ should there shareholding to HNA was that they didn't want to poor any more cash into an failing airline that keeps bleeding money.


You also conveniently forgot that the QF group via JQ had also decided to ramp up their NZ domestic operations as one of the reasons for bailing from VA.

NZ simply doesn't have the capital to fight QF/JQ on their own turf and fund a very divided and financially weak VA at the same time, nor had the time or capital to fund a 3rd airline to compete against QF and VA in Aust.

The subsequent divorce between VA and NZ however had NZ giving potential future LAX slots (through VA) to DL, in addition to positioning VA as a potential future domestic/Tran-Tasman SkyTeam feeder considering DL also being coy whether to make a move for VA themselves or not.

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