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lightsaber
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Re: HNA's airlines miss lease payments

Sun Dec 17, 2017 2:04 pm

The best indicator of a company's health is often bond yields. Ok, not a perfect indicator, but usually a good one. This WSJ link notes that HNA's group bond yields are increasing (2nd hand price of bonds are dropping, never a good sign that investors are willing to sell at a discount).
https://www.wsj.com/articles/chinas-hna ... 1513187628


"Troubles are also bubbling up in some of HNA’s aviation-related units. The management of Hainan Airlines Holding Co. Ltd., a HNA unit that is a majority shareholder in more than a dozen HNA-affiliated airlines, has held internal discussions in recent weeks to determine which lessors the airlines should make lease payments to first, said a person familiar with the matter. A HNA spokesman had no immediate comment."



BestWestern wrote:
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.

To raise money selling assets:
1. Buy low and sell high (not HNA group)
2. Pay off debt at a quick pace so that assets have a cash out value greater than the debt (not HNA group)
3. Sell to a lucky high bidder (which was HNA group).

In an auction system, uneducated buyers overpay:
"The winner's curse is a phenomenon that may occur in common value auctions with incomplete information. The winner's curse says that in such an auction, the winner will tend to overpay."
https://en.wikipedia.org/wiki/Winner%27s_curse

Being selectively late with lease payments is a bad sign. I realize it can be a negotiating tactic, but I doubt it. The group fundamentals are so poor that this house of cards would fall apart in a free economy.

https://www.ch-aviation.com/portal/news ... -lucky-air

Wow.... HNA's 'reassurance' is scary:
Of credit lines of 800 billion yuan ($120.9 billion USD), 490 billion yuan are used. That isn't much cushion! Not for a holding company. (See the first link of this post).

IMHO, the company is functionally bankrupt, but is being allowed to continue operating.
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zakuivcustom
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Re: HNA's airlines miss lease payments

Fri Jan 12, 2018 6:35 am

Bumping this thread up, just more woe for HNA:

http://m.scmp.com/business/companies/ar ... charts-new

No impact operational-wise yet, but in long run, can HU network be even sustained as-is is a big question.
 
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Re: HNA's airlines miss lease payments

Mon Jan 15, 2018 3:31 pm

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zakuivcustom
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Re: HNA's airlines miss lease payments

Mon Jan 15, 2018 3:37 pm

KarelXWB wrote:


Saw this part:
Tianjin Airlines has asked a Chinese lessor to delay June rental payments for three aircraft, said one source with direct knowledge.


And they're still planning to fly long-haul routes to LAX or Europe :rotfl:

At the end of the day, it's your typical over expansion, especially into a market that they don't know anything about. Those "western devil" are certainly laughing all the way to the bank now after HNA way overpay for all their assets :rotfl: :rotfl: .
 
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Re: HNA's airlines miss lease payments

Mon Jan 15, 2018 4:55 pm

It's quite possible for a profitable company to simply run out of cash, but it's easier for an unprofitable company. I suspect both are at play here. They aren't profitable and they also are cash poor.
 
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Re: HNA's airlines miss lease payments

Mon Jan 15, 2018 9:37 pm

Why does Hainan Airlines have so many mini airlines? Why can't they all be one?
 
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Re: HNA's airlines miss lease payments

Fri Feb 09, 2018 8:35 am

HNA Group faces cash shortfall in Q1 and tries to sell as much as $15.8bn of assets.

HNA Group will try to sell as much as CNY100 billion (USD15.8 billion) worth of assets during the current half of the year in order to improve liquidity, the conglomerate told creditors at the end of January.

Bloomberg reports HNA will seek to shed CNY20 billion worth of assets in the first quarter of the year, followed by a further CNY80 billion in the second quarter. It faces a cash shortfall of around CNY15 billion in the first quarter alone.


https://www.ch-aviation.com/portal/news ... -liquidity
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Re: HNA's airlines miss lease payments

Wed Feb 28, 2018 6:57 pm

Reuters: HNA have $476M unpaid fuel bill with a national fuel company
https://www.reuters.com/article/us-hna- ... SKCN1GC0Y9

The article cited a senior in the industry say, "HNA has not stopped fully paying its bills, but it only has paid a small amount at a time, so the outstanding (balance) has grown bigger and bigger,"

The article also mentioned that the fuel company continues supplying fuel to HNA in order to prevent causing social problem due to flight cancellations.
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Electronpusher9
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Re: HNA's airlines miss lease payments

Wed Feb 28, 2018 7:02 pm

Being a Chinese business, aren't they owned by the Government? And.if this is true does this mean the PRC is bankrupt?
 
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Re: HNA's airlines miss lease payments

Wed Feb 28, 2018 7:14 pm

Electronpusher9 wrote:
Being a Chinese business, aren't they owned by the Government? And.if this is true does this mean the PRC is bankrupt?



The PRC isn't bankrupt.

They could certainly be due for a 'bailout' which would be a first for China's forray into capitalism.

Due to the social norms of "saving face" in that area of the world, I would say we don't truly know how deep or bad the problem is.
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Re: HNA's airlines miss lease payments

Wed Feb 28, 2018 7:31 pm

Electronpusher9 wrote:
Being a Chinese business, aren't they owned by the Government? And.if this is true does this mean the PRC is bankrupt?


Where did you get this idea from anyway? While there are still many state-owned company in China (The CN3, just for starter, are all 100% owned by government), and they do still controlled many sectors (Power, Communication, Automotive, Aerospace, Petroleum, Mining, etc.), HNA Group is not one of them, nor are 100s of business (i.e. The "big 3" tech in Baidu/Alibaba/Tencent, just to start) that are pretty big.

(A list of SOE in China: https://en.wikipedia.org/wiki/State-own ... te_Council)

Oh well, just adding on to HNA's cash problem anyway. They simply can't keep borrow and borrow more like old times, and now, is having more and more problems.
 
hayzel777
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Re: HNA's airlines miss lease payments

Wed Feb 28, 2018 7:33 pm

If they can barely pay CNAF, are the fuel bills at outstations being paid in small amounts too? If they are, I wouldn't be surprised if they cut them off soon as the bill becomes too large because they could care less about "social responsibility"
 
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Re: HNA's airlines miss lease payments

Wed Feb 28, 2018 7:42 pm

zakuivcustom wrote:
Electronpusher9 wrote:
Being a Chinese business, aren't they owned by the Government? And.if this is true does this mean the PRC is bankrupt?


Where did you get this idea from anyway? While there are still many state-owned company in China (The CN3, just for starter, are all 100% owned by government), and they do still controlled many sectors (Power, Communication, Automotive, Aerospace, Petroleum, Mining, etc.), HNA Group is not one of them, nor are 100s of business (i.e. The "big 3" tech in Baidu/Alibaba/Tencent, just to start) that are pretty big.

(A list of SOE in China: https://en.wikipedia.org/wiki/State-own ... te_Council)

Oh well, just adding on to HNA's cash problem anyway. They simply can't keep borrow and borrow more like old times, and now, is having more and more problems.

HNA isn’t directly state owned, but their corporate structure is such a convoluted mess it is hard to say how much of them is owned by a government/goverment entity.
 
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Re: HNA's airlines miss lease payments

Wed Feb 28, 2018 9:26 pm

Varsity1 wrote:
The PRC isn't bankrupt.

They could certainly be due for a 'bailout' which would be a first for China's forray into capitalism.

Due to the social norms of "saving face" in that area of the world, I would say we don't truly know how deep or bad the problem is.

Maybe a first among Chinese aviation industry but certainly not the first Chinese company to be bailout by the government. They have just taken over control of Anbang Insurance recently which is in a similar situation to HNA.

Polot wrote:
HNA isn’t directly state owned, but their corporate structure is such a convoluted mess it is hard to say how much of them is owned by a government/goverment entity.

Actually, people seems to believe the current difficulties faced by HNA is related to power struggle among higher-ups in the party
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JamesCousins
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Re: HNA's airlines miss lease payments

Wed Feb 28, 2018 10:08 pm

MalevTU134 wrote:
Hang on...so they own an aircraft leasing firm...and lease from others, whom they don't pay?


That's one way to get an advantage over the competition I suppose :lol:
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Re: HNA's airlines miss lease payments

Thu Mar 01, 2018 1:41 am

aircanadaa330 wrote:
sounds like they should just sell off some assets

They are actually selling off a lot of different assets now. But selling takes time and it does not seem like they have recovered enough cash from those selling
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Re: HNA's airlines miss lease payments

Thu Mar 01, 2018 2:06 am

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

Since Virgin Australia is always losing money I don't think it will be good.
 
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Re: HNA's financial woes

Thu Mar 01, 2018 4:10 am

http://m.scmp.com/business/china-busine ... force-says

Just more bad news. No effect on the aviation side of things yet, but HNA is definitely just borrowing time.
 
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Re: HNA's financial woes

Thu Mar 01, 2018 7:22 am

This article, about a year ago, gave an overall picture how HNA Group's creative accounting has already taking its toll on the Group.

https://asia.nikkei.com/magazine/201702 ... s-concerns
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Re: HNA's financial woes

Thu Mar 01, 2018 9:07 am

Below NPR podcast sheds further light on how crazy and misguided their buying strategy was:
https://www.npr.org/sections/money/2017 ... -the-world
 
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Re: HNA's airlines miss lease payments

Thu Mar 01, 2018 11:36 am

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

Since Virgin Australia is always losing money I don't think it will be good.


Virgin announced a profit yesterday.
 
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Re: HNA's financial woes

Thu Mar 01, 2018 11:52 am

Now sure if it's entirely related to HNA's financial woes, but a new Hainan 737 MAX has been put in (temporary?) storage in Renton.
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Re: HNA's financial woes

Thu Mar 01, 2018 12:19 pm

Looks like HNA is Norwegian on stilts
 
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Re: HNA's financial woes

Thu Mar 01, 2018 12:46 pm

Egerton wrote:
Looks like HNA is Norwegian on stilts


Not really. HNA Aviation (So HU and the like) is the least of the problem for HNA group, at least operation wise. The place they are burning money at is with all those loans on loans that they used to acquired foreign asset (properties, Deustche Bank, etc) that they simply can't repay now that those loans are maturing.

Their cash problem is mainly b/c CCP start to clamp down on loans that are just given out "just because", especially for any purchase of foreign assets. The gov't claim, of course, is to prevent a total meltdown, 2008 style, when all the bad loans mature and companies like HNA or Anbang or Wanda can't repay them. The last thing CCP wants is a total financial meltdown and "destabilize" the "harmonious society", and with that, bring down the power of CCP and especially Emperor Xi.

My prediction? HNA Aviation will get spin off if things really go south.
 
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Re: HNA's financial woes

Thu Mar 01, 2018 3:07 pm

Is this topic one of the significantly impactful industry themes of 2018?
Rhetorical questions:
1). As one gets informed and reflects, the "Butterfly effect" phenomenon enters as a question... does it permeate the theme?
As a holding company there are layers of public companies. In HNAs case many of the layers have pledged stock for cash, creating a possibility for compounded leverage (this multiplier may be why HNA is a topic of discussion). Pledging stock for loans often comes with covenants, ie if the stock price falls to a certain level a credit event occurs. 2). Has the halting of trading of many of these companies frozen the price? 3). Has this action effectively prevented covenant triggers? 4). Is there a domino risk?
HNA's need for liquidity is inspiring a less than disciplined divestiture effort. Media suggests that the real estate portfolio is defaulting as the goto based on comparative liquidity. They claim the significant equity holdings are difficult to transact within the needed time-frame.
Buffet is shopping and can close quickly. 5). Is Avolon within the spectrum of his investment themes? 6). Can Avolon separate their HNA family-of-airline lease business from the broader industry business?
Avolon leases to the HNA family of airlines. 7). If HNA makes token payments on their ballooning fuel bill will they begin to replicate the strategy with their in house lessor?
8). How is Avolon's affiliation with the family of HNA airlines effecting their business? ie., considering Avolon's parent owns 24% of Azul, what are GOL's motivations when making a lessor choice?
9). Is this an opportunity for United to make a bid to acquire a larger share of Azul at a liquidity discount? ... or a similar theme?
10). while a ripple, how is this affecting the A330 bridge production channel?
 
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Re: HNA's financial woes

Thu Mar 01, 2018 3:25 pm

All very good questions Amdieson that I long to have answered. Is HNA indicative of a bubble we might see burst in the near future? Airline or not, what we are talking about is indicative of strife and when the heat comes on even stronger what is their mechanism for survival? Their route strategy is quite unique to say the least. Their fleet investment is well known. I am watching closely. This feels like a situation which could implode from the little that we know. This warrants further discussion.
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Re: HNA's financial woes

Thu Mar 01, 2018 5:20 pm

The last thing Dada Xi needs is chaos in the private sector from these CEO's taking on massive risk. HNA will become a state owned entity in the blink of an eye if they cannot get their problems under control ASAP. One only needs to look at the developments in China the past few weeks.
 
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Re: HNA's financial woes

Sat Mar 03, 2018 1:38 am

Oh and by the way, HX in the HNA group was trying to sell some sort of batch tickets to its frequent flyer a few weeks ago. For about 2500USD in Economy and about 5500USD in Business, travellers can get up to 510 set of return tickets from HKG to Japan and Korea in a year. Some netizens see it as a desperate cash grab attempt
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Re: HNA's financial woes

Sat Mar 03, 2018 1:48 am

zakuivcustom wrote:
Egerton wrote:
Looks like HNA is Norwegian on stilts


Not really. HNA Aviation (So HU and the like) is the least of the problem for HNA group, at least operation wise. The place they are burning money at is with all those loans on loans that they used to acquired foreign asset (properties, Deustche Bank, etc) that they simply can't repay now that those loans are maturing.

Their cash problem is mainly b/c CCP start to clamp down on loans that are just given out "just because", especially for any purchase of foreign assets. The gov't claim, of course, is to prevent a total meltdown, 2008 style, when all the bad loans mature and companies like HNA or Anbang or Wanda can't repay them. The last thing CCP wants is a total financial meltdown and "destabilize" the "harmonious society", and with that, bring down the power of CCP and especially Emperor Xi.

My prediction? HNA Aviation will get spin off if things really go south.

Your pointing out the global connectivity is scary.

Banks, other airlines..

Too many Ponzi schemes failing too quickly in China... This could leave a mark...

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zakuivcustom
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Re: HNA's financial woes

Sat Mar 03, 2018 2:59 pm

lightsaber wrote:
zakuivcustom wrote:
Egerton wrote:
Looks like HNA is Norwegian on stilts


Not really. HNA Aviation (So HU and the like) is the least of the problem for HNA group, at least operation wise. The place they are burning money at is with all those loans on loans that they used to acquired foreign asset (properties, Deustche Bank, etc) that they simply can't repay now that those loans are maturing.

Their cash problem is mainly b/c CCP start to clamp down on loans that are just given out "just because", especially for any purchase of foreign assets. The gov't claim, of course, is to prevent a total meltdown, 2008 style, when all the bad loans mature and companies like HNA or Anbang or Wanda can't repay them. The last thing CCP wants is a total financial meltdown and "destabilize" the "harmonious society", and with that, bring down the power of CCP and especially Emperor Xi.

My prediction? HNA Aviation will get spin off if things really go south.

Your pointing out the global connectivity is scary.

Banks, other airlines..

Too many Ponzi schemes failing too quickly in China... This could leave a mark...

Lightsaber


There were definitely questions even few years ago as to how in the world the like of HNA or Wanda have so much money to just buy up literally everything in the world. Now we know :scratchchin:

On the other hand, "Too big to fail" apply in China also:
https://www.wsj.com/articles/chinese-co ... 1520045305

Time will tell whether HNA will become your typical Zombie company, though. It's definitely moving that way. And we all know that's not exactly good for economy (See Japan and its Lost Decades)
 
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Re: HNA's airlines miss lease payments

Sat Mar 03, 2018 3:54 pm

eamondzhang wrote:
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


Could they sell the 787s and cancel the ones they have on order? Pleeeease! :stirthepot: :duck:

(P.S. And replace them with something more passenger-friendly when they recover, which I totally wish them.)
 
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Re: HNA's airlines miss lease payments

Sat Mar 03, 2018 8:11 pm

zkncj wrote:
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.


Air NZ didn't sell to HNA. The Virgin shares were sold to Nanshan Group.

https://www.smh.com.au/business/compani ... pfw5q.html

China's Nanshan Group to buy Virgin Australia stake from Air New Zealand

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Re: HNA's financial woes

Sat Mar 03, 2018 11:24 pm

I recall a postin a previous thread where the CAAC had instructed CA/CZ/MU to come up with contingency plans in case HU & co went uder... if that's true, doesn't sound like nationalisation and continued operations is an option.
 
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Re: HNA's financial woes

Sun Mar 04, 2018 3:28 am

I have a flight booked on HNA to the US in July, hopefully they are still operating.
 
Electronpusher9
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Re: HNA's airlines miss lease payments

Sun Mar 04, 2018 3:55 am

zakuivcustom wrote:
Electronpusher9 wrote:
Being a Chinese business, aren't they owned by the Government? And.if this is true does this mean the PRC is bankrupt?


Where did you get this idea from anyway? While there are still many state-owned company in China (The CN3, just for starter, are all 100% owned by government), and they do still controlled many sectors (Power, Communication, Automotive, Aerospace, Petroleum, Mining, etc.), HNA Group is not one of them, nor are 100s of business (i.e. The "big 3" tech in Baidu/Alibaba/Tencent, just to start) that are pretty big.

My idea came from the Communists tendency to control all business and people. And those they have difficulty controlling either kill or imprison.
(A list of SOE in China: https://en.wikipedia.org/wiki/State-own ... te_Council)

Oh well, just adding on to HNA's cash problem anyway. They simply can't keep borrow and borrow more like old times, and now, is having more and more problems.
 
zakuivcustom
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Re: HNA's financial woes

Mon Mar 05, 2018 2:59 pm

Well, looks like it's getting worse:

https://www.mingtiandi.com/real-estate/ ... -pay-fuel/

It could spell the beginning of the end for HU if they get grounded. Of course, whether CCP will just bailed them out if that happen is another thing.
 
burnsie28
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Re: HNA's financial woes

Mon Mar 05, 2018 3:04 pm

I think they will get away with no paying fuel bills in China for longer. But outside of that, such as the U.S. I bet those fuel companies will cut them off.
 
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KarelXWB
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Re: HNA's financial woes

Mon Mar 05, 2018 8:20 pm

In addition to that 737 MAX in storage, a brand new & undelivered A330 has been ferried to LDE for storage.

Presumably the aviation unit is not doing so well.

Image
F-WWKU Airbus A330 Capital Airlines by @Eurospot, on Flickr
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aemoreira1981
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Re: HNA's financial woes

Mon Mar 05, 2018 9:16 pm

chrisp390 wrote:
The last thing Dada Xi needs is chaos in the private sector from these CEO's taking on massive risk. HNA will become a state owned entity in the blink of an eye if they cannot get their problems under control ASAP. One only needs to look at the developments in China the past few weeks.


Perhaps the non-flying assets and maybe the owned planes flying for HNA carriers, but probably not the airlines themselves. Leased aircraft (outside the HNA group ownership) would probably be returned to lessors. Is a comparison to SAirGroup valid?
 
StuckinCMHland
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Re: HNA's financial woes

Tue Mar 06, 2018 12:39 pm

burnsie28 wrote:
I think they will get away with no paying fuel bills in China for longer. But outside of that, such as the U.S. I bet those fuel companies will cut them off.


It's a totalitarian state, no matter how they try to put lipstick on the pig. If the CCP leadership wants to the keep the thing going, it will continue in whatever form is convenient for the Party. If their new Chairman Mao doesn't want it to continue, it will disappear and die, along with some or much of the leadership too. Vendors and businesses it has relationships with and ownership of in other places will get a middle-finger salute and that will be it.

If it does not happen immediately it will happen sooner or later when convenient for the Party.
 
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KarelXWB
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Re: HNA's financial woes

Thu Mar 08, 2018 6:13 pm

Another undelivered A330 on the way to LDE for storage:

https://www.flightradar24.com/data/aircraft/f-wwyd
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OB1504
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Re: HNA's financial woes

Thu Mar 08, 2018 8:16 pm

[*]
burnsie28 wrote:
I think they will get away with no paying fuel bills in China for longer. But outside of that, such as the U.S. I bet those fuel companies will cut them off.


What happens if they own the fuel company?
 
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c933103
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Re: HNA's financial woes

Thu Mar 15, 2018 4:42 pm

According to media report, last week South China Bluesky Aviation Oil Co.,Ltd have already issued an ultimatum demanding HNA to pay for all the unpaid fuel bill and default penalty and provide a written promise of no further delay in payment before 16:00 March 16 otherwise they would stop supplying fuel to HNA. Which mean about 15.5 hours from now.


On the other hand, there are report that CA have started talking to HNA and the city government of Beijing to discuss the possibility of acquiring Capital Airlines. However HNA denied this report.
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Blerg
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Re: HNA's financial woes

Thu Mar 15, 2018 4:47 pm

I wonder what will happen to political routes that are important to the Chinese government that are currently operated by Hainan if they stop receiving fuel. Somehow I doubt it will come to that.
 
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Re: HNA's financial woes

Thu Mar 15, 2018 6:29 pm

Some other news related to HNA group:
* The airline caterer Gategroup is now going through IPO process in Switzerland
* There are reports that HNA's various subsidiaries in different part of China are seeking support from government of each of those cities via capital increase
* Report claims they are trying to sell one of their currently under construction twin tower in Haikou, which will be the highest tower in Hainan after their completion. HNA responded that they did not intended to sell it but there are other companies seeking to cooperate with them on this landmark project
* CAAC have also contacted HNA with respect to the situation and their delayed payment for fuel and government support fund and such and asked them to.pay as soon as possible although there are still no complusive actions being issued. Reportedly it is said that it have already affected the gains of other upstream and downstream companies in the industry
* They are selling all their stakes at Hilton Grand Vacations
* Three out of four of their land acquired earlier in Hong Kong have been sold off and the remaining one land is reportedly going to be sell off soon too
* Many of their hotels and properties in China are reportedly also available for sales
It's pointless to attempt winning internet debate.
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c933103
Posts: 4157
Joined: Wed May 18, 2016 7:23 pm

Re: HNA's financial woes

Fri Mar 16, 2018 8:23 am

Reportedly they have repaid fuel bill to CNAF and is negotiating on penalty and future arrangement
It's pointless to attempt winning internet debate.
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OB1504
Posts: 3938
Joined: Tue Jul 27, 2004 5:10 am

Re: HNA's financial woes

Fri Mar 16, 2018 8:47 pm

c933103 wrote:
Some other news related to HNA group:
* The airline caterer Gategroup is now going through IPO process in Switzerland


HNA is also considering an IPO for ground handler Swissport.
 
zakuivcustom
Posts: 3508
Joined: Sat Jun 10, 2017 3:32 am

Re: HNA's financial woes

Fri Mar 16, 2018 9:25 pm

c933103 wrote:
Reportedly they have repaid fuel bill to CNAF and is negotiating on penalty and future arrangement


Nothing is really confirmed yet. Another source said they've begin to repay the bills, but not sure if it's pay in full yet.

https://www.businesstimes.com.sg/transp ... l-supplier

Most Chinese news source do say that they've repay the bill, though...

Other than that, pretty much a bunch of fire sales that c933103 already listed. The last of the 3 Hilton investments (Hilton Worldwide) is rumor to be the next to be on the block now that HNA sold its stake in Park Hotels and Hilton Grand Vacation.

https://www.bloomberg.com/news/articles ... t-on-block
 
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mercure1
Posts: 4767
Joined: Sun Jul 13, 2008 5:13 am

Re: HNA's financial woes

Thu Mar 22, 2018 5:29 pm

AirAsia confirms talks with HNA about potential partnership/asset sale.

https://asia.nikkei.com/Business/AC/Air ... -purchases
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