Moderators: jsumali2, richierich, ua900, PanAm_DC10, hOMSaR

 
asuflyer
Topic Author
Posts: 569
Joined: Mon Jan 01, 2007 12:48 pm

Future of HNA’s Hong Kong Airlines in Doubt

Tue Dec 18, 2018 4:26 pm

A very bleak picture at HX, multiple high level resignations, JFK and LON have not started as planned. A350’s sitting undelivered in Toulouse. All of this really helps CX.

https://m.scmp.com/news/hong-kong/trans ... three-high
 
User avatar
lightsaber
Moderator
Posts: 20573
Joined: Wed Jan 19, 2005 10:55 pm

Re: Future of HNA’s Hong Kong Airlines in Doubt

Tue Dec 18, 2018 4:29 pm

There is an economic bubble unwinding in China and HNA group, with their airlines, is just one symptom. Cest la vie.

Lightsaber
Winter is coming.
 
aldrigsomandre
Posts: 346
Joined: Mon Nov 23, 2015 2:30 am

Re: Future of HNA’s Hong Kong Airlines in Doubt

Tue Dec 18, 2018 4:41 pm

HNA has expanded way too aggressively and now they're suffering. Not surprising at all. Sad for the airline though. Great service and product.
 
TWA85
Posts: 359
Joined: Tue Feb 14, 2012 10:06 pm

Re: Future of HNA’s Hong Kong Airlines in Doubt

Tue Dec 18, 2018 4:58 pm

Would DL/MU be interested in acquiring HX? DL struggled to remain competitive in HKG and has left the market. Skyteam overall is also weak there. HX has the potential to partially offset the loss of CZ if it were supported and managed by DL and MU.
 
airzona11
Posts: 1784
Joined: Wed Dec 17, 2014 5:44 am

Re: Future of HNA’s Hong Kong Airlines in Doubt

Tue Dec 18, 2018 5:09 pm

lightsaber wrote:
There is an economic bubble unwinding in China and HNA group, with their airlines, is just one symptom. Cest la vie.

Lightsaber


And one where the unit economic advantage of the new jets does not overcome their expensive price tag.
 
MaverickM11
Posts: 18250
Joined: Thu Apr 06, 2000 1:59 pm

Re: Future of HNA’s Hong Kong Airlines in Doubt

Tue Dec 18, 2018 5:13 pm

Are there any subsidies for airlines in HKG like there are in every Chinese city?
I don't take responsibility at all
 
raylee67
Posts: 934
Joined: Mon Oct 24, 2011 11:06 pm

Re: Future of HNA’s Hong Kong Airlines in Doubt

Tue Dec 18, 2018 5:31 pm

MaverickM11 wrote:
Are there any subsidies for airlines in HKG like there are in every Chinese city?

No. HKG is a high yield destination. In 2017, it was the 8th busiest airport in the world in terms of number of passengers, logging over 72 million passengers for the year. It doesn't need subsidies to get airlines to fly there. It's like asking if JFK or LHR subsidizes any carriers. And also not every Chinese airports offer subsidies. For example, PEK, PVG/SHA and CAN do not offer subsidies. They have more flights than they can handle and flights are constantly delayed for hours because of congestion at those airports. Only second or third tier airports offer subsidies, especially to inter-continental destinations.

HX's problem is from its owner, HNA Group. And HNA Group's problem is that, with easy credit in the last few years, it has literally spent money blindly overseas to buy anything it can get its hands on. It has bought residential lands in Hong Kong and hotels in US. It has acquired Gate Gourmet. It even owned 10% of Deutsche Bank! It used short term loans to fund those purchases. Some of the loans was as short as 6 months, and it kept rolling them over (i.e. negotiating with lenders every 6 months for a new loan to repay the original maturing loan). But with central banks everywhere withdrawing liquidity and raising interest rate, suddenly it no longer can roll over the loans at low rate and as easily. It has been forced to roll over loans at rate that is almost 20% per year.

So now it cannot pay for its operations. There was news a few weeks ago that HNA Group has defaulted on some domestic bonds in China and has offered to repay the bondholders with airline voucher of Hainan Airlines!
319/20/21 332/33 342/43/45 359/51 388 707 717 732/36/3G/38/39 74R/42/43/44/4E/48 757 762/63 772/7L/73/7W 788/89 D10 M80 135/40/45 175/90 DH1/4 CRJ/R7 L10
AY LH OU SR BA FI LX
AA DL UA NW AC CP WS FL NK PD
CI NH SQ KA CX JL BR OZ TG KE CA CZ NZ JQ RS
 
NZ321
Posts: 1231
Joined: Fri Jul 31, 2015 8:00 pm

Re: Future of HNA’s Hong Kong Airlines in Doubt

Tue Dec 18, 2018 5:53 pm

So are we about to see them go bankrupt? What is predicted?
Plane mad!
 
zakuivcustom
Posts: 3568
Joined: Sat Jun 10, 2017 3:32 am

Re: Future of HNA’s Hong Kong Airlines in Doubt

Tue Dec 18, 2018 5:54 pm

TWA85 wrote:
Would DL/MU be interested in acquiring HX? DL struggled to remain competitive in HKG and has left the market. Skyteam overall is also weak there. HX has the potential to partially offset the loss of CZ if it were supported and managed by DL and MU.


Not sure how things works for an airline with an existing AOC, as airlines based in Hong Kong cannot be majority held by a foreign entity (at least initially I guess), which is why HX was initially 45% held by HNA and 55% by Mung Kin-Keung, who has HKID and thus, is consider "from Hong Kong", even though he's associated with Grand Xinhua Airlines and thus, technically the same source of money under different name (Mung also resigned in November from another news source). HNA eventually took a larger part of shares of HX afterward, though, with Mung's share down to something like 0.3% while HNA held >60% of HX.

In another word, it's not as simple as "DL/MU acquiring HX", b/c I'm not sure if they can even do that. Jetstar HK ran into trouble as CX (and HX) protests that it's not "base in HK" as it's not majority owned by an entity in Hong Kong (Even though Shun Tak Holdings eventually own 51% of Jetstar HK), and thus, its AOC application got rejected.

MaverickM11 wrote:
Are there any subsidies for airlines in HKG like there are in every Chinese city?


Nope. Or else why would HX's chief competitor, aka CX, lose money for the past year plus? HK has its own set of aviation laws anyway.

raylee67 wrote:
HNA Group's problem is that, with easy credit in the last few years, it has literally spent money blindly overseas to buy anything it can get its hands on. It has bought residential lands in Hong Kong and hotels in US. It has acquired Gate Gourmet. It even owned 10% of Deutsche Bank! It used short term loans to fund those purchases. Some of the loans was as short as 6 months, and it kept rolling them over. But with central banks everywhere withdrawing liquidity and raising interest rate, suddenly it no longer can roll over the loans at low rate. It has been forced to roll over loans at rate that is almost 20% per year.


Indeed. Plus HNA's aviation operation by itself actually makes money. Any money they made through there are spent repaying those high interest loans, though, with no money left to pay for anything else.

And it's not "withdrawing liquidity", rather, it's a tightening of money by Chinese Central Bank that basically stops Chinese companies from buying stuff that's outside mainland China. It's nothing more than an effort by Emperor Xi to basically stop the outflow of Chinese money, just b/c, IMHO, no rich people in mainland China in their right mind is going to keep their money in mainland (Hong Kong being one of the place where a tons of those "hot money" went, mostly in terms of buying up all the lands/properties, some went further aboard to US, mainly LA and NYC, or Canada, mainly Vancouver and Toronto, b/c they feel that even HK is no longer "safe" enough from influence of central gov't). That lead to a chain reaction, though, as HNA can no longer use loan to cover their older loan, and actually start having to repay them.

Not HNA, but Wanda Group, who like HNA went on a shopping spree: (It's behind paywall, but you get the idea)
https://www.wsj.com/articles/chinas-lat ... 1500802203

HX will be fine - somebody is going to buy them (at the right price, of course, which is another problem that HNA face also - they're basically selling assets at prices below what they brought them for, b/c other companies/investors know that HNA is desperate for cash). Perhaps even Swire/CX, just to prevent another company from gobbling up HX (along with UO) and get their monopoly in HK back.

EDIT:
NZ321 wrote:
So are we about to see them go bankrupt? What is predicted?


Doubt it. Yes, executives are jumping ships, but it's not like HX itself is deep in red ink (i.e. AI or AZ), either. It had long been rumored that HX/UO is up for sale anyway.
 
B1168
Posts: 507
Joined: Tue Dec 18, 2018 10:26 pm

Re: Future of HNA’s Hong Kong Airlines in Doubt

Tue Dec 18, 2018 11:18 pm

aldrigsomandre wrote:
HNA has expanded way too aggressively and now they're suffering. Not surprising at all. Sad for the airline though. Great service and product.


Completely agree. They have so many planes to use that they requested for KWE-CDG&CTU-ORD! Ludicrous, right? They lack a hub!
 
User avatar
hongkongflyer
Posts: 828
Joined: Tue Oct 28, 2014 8:23 am

Re: Future of HNA’s Hong Kong Airlines in Doubt

Wed Dec 19, 2018 3:16 am

NZ321 wrote:
So are we about to see them go bankrupt? What is predicted?


No, HNA's financial difficulties is mainly due to the order of PRC central bank,
requesting financial institutes in China not providing funds for its oversea acquisitions as
they want HNA to focus on airline business.

However, HNA's airline business itself is profit making and PRC Government has already mentioned that
they won't let this part of business collapse and will provide financial supports to HNA for this part of business.

So anyone hoping airlines under HNA Group going bankrupt won't happened.
 
eamondzhang
Posts: 1876
Joined: Thu Sep 23, 2010 8:23 am

Re: Future of HNA’s Hong Kong Airlines in Doubt

Wed Dec 19, 2018 3:23 am

hongkongflyer wrote:
[
However, HNA's airline business itself is profit making and PRC Government has already mentioned that
they won't let this part of business collapse and will provide financial supports to HNA for this part of business.

So anyone hoping airlines under HNA Group going bankrupt won't happened.

Not in 2018. They've lost US$500 million on international route alone even with subsidies (HU only not counting subsidiaries) for the first nine months of 2018. Business is going very hard and that's why they're forced to bail out on a lot of regionals they set up - Lucky Air, Capital Airlines and Urumqi Air being the first three that are sold off.

Current strong rumour is all HX A350s are being transferred to HU.

Michael
 
zakuivcustom
Posts: 3568
Joined: Sat Jun 10, 2017 3:32 am

Re: Future of HNA’s Hong Kong Airlines in Doubt

Wed Dec 19, 2018 4:12 am

For those who want latest on HNA Group's situation:
https://www.reuters.com/article/us-hna- ... SKBN1OD0V0

Basically at the end, HNA will consist of HU and is logistic business, but nothing else. It's simply a matter of time (and well, "right price") before HX/UO stakes will be offload also. Without the (formerly) HNA piggy bank behind HX, though, the crazy expansion phrase should end.

eamondzhang wrote:
Current strong rumour is all HX A350s are being transferred to HU.


Just so CX gets that semi-monopoly (Ok, there's AA, but it's not like AA and CX really compete) back on LAX-HKG. As somebody that was looking forward to HX further expand (Crossing finger for ORD...) in US, it's definitely not good news if the rumor is true.
 
EBT
Posts: 79
Joined: Tue Mar 27, 2018 1:04 am

Re: Future of HNA’s Hong Kong Airlines in Doubt

Wed Dec 19, 2018 5:51 am

zakuivcustom wrote:

Not sure how things works for an airline with an existing AOC, as airlines based in Hong Kong cannot be majority held by a foreign entity (at least initially I guess), which is why HX was initially 45% held by HNA and 55% by Mung Kin-Keung, who has HKID and thus, is consider "from Hong Kong", even though he's associated with Grand Xinhua Airlines and thus, technically the same source of money under different name (Mung also resigned in November from another news source). HNA eventually took a larger part of shares of HX afterward, though, with Mung's share down to something like 0.3% while HNA held >60% of HX.

In another word, it's not as simple as "DL/MU acquiring HX", b/c I'm not sure if they can even do that. Jetstar HK ran into trouble as CX (and HX) protests that it's not "base in HK" as it's not majority owned by an entity in Hong Kong (Even though Shun Tak Holdings eventually own 51% of Jetstar HK), and thus, its AOC application got rejected.



Not quite correct - Hong Kong does not require majority local ownership but rather the management control must be located in HKG. Heck, Cathay is ultimately controlled by Swire Group which is headquartered in London, so ownership doesn't have much in it.

Jetstar HK failed because the structure of the Jetstar group sees most of the strategic decision making located in Melbourne. That allows them to get a lot more synergies out of the group and ultimately lowers the cost by having a single revenue management team, strategy team etc. Qantas tried to circumvent that by introducing Pansy Ho and upping other local credentials, but the regulator ultimately saw through that, and along with the slots issue, decided not to issue a license.

At the moment, depending on which sources you believe, everything at HNA is up for sale, so it's likely that it is shopping HX and UO out there for bidders. While they may not be perennial profit makers, as AOCs with operations in place and a decent bank of slots at HKG, there are likely to be a few interested parties around, but like anything in business it all comes down to price, and how wide the gulf is between a potential bidder buying it and what HNA wants to sell it for. That may narrow considerably if the situation at HNA remains dire.
 
3AWM
Posts: 232
Joined: Sat Jul 23, 2016 1:01 pm

Re: Future of HNA’s Hong Kong Airlines in Doubt

Wed Dec 19, 2018 9:44 am

I would see CX as being the buyer who could derive the most benefit - they could get more slots and drive out a competitor. Are there competition law issues in HK that would stop this.

If DL purchase they could rename it "Pearl River Delta".
 
zakuivcustom
Posts: 3568
Joined: Sat Jun 10, 2017 3:32 am

Re: Future of HNA’s Hong Kong Airlines in Doubt

Wed Dec 19, 2018 2:25 pm

EBT wrote:
Not quite correct - Hong Kong does not require majority local ownership but rather the management control must be located in HKG. Heck, Cathay is ultimately controlled by Swire Group which is headquartered in London, so ownership doesn't have much in it.


Well, Swire Pacific is still a HK-based company (with HK-based management). But then, ultimately we all know the Jetstar HK debacle was due to CX and HX not wanting another competitor around :scratchchin:

3AWM wrote:
I would see CX as being the buyer who could derive the most benefit - they could get more slots and drive out a competitor. Are there competition law issues in HK that would stop this.

If DL purchase they could rename it "Pearl River Delta".


Yes, HK do have competition law (Although it's VERY recent):
https://www.scmp.com/presented/business ... tarts-hong

Don't think for a moment that it really does anything, though.

BTW, "Pearl River Delta"? Come on, it's "Yueguangao Greater Bay Area" now :rotfl: (Well, to be more technical, buzzword-wise, PRD referred to the geographic area while Greater Bay Area is some "economic framework" for "increasing cooperation within the region", aka IMHO, a bunch of political BS).
 
User avatar
chunhimlai
Posts: 617
Joined: Wed Jun 03, 2015 11:03 am

Re: Future of HNA’s Hong Kong Airlines in Doubt

Wed Dec 19, 2018 2:40 pm

raylee67 wrote:
MaverickM11 wrote:
Are there any subsidies for airlines in HKG like there are in every Chinese city?

No. HKG is a high yield destination. In 2017, it was the 8th busiest airport in the world in terms of number of passengers, logging over 72 million passengers for the year. It doesn't need subsidies to get airlines to fly there. It's like asking if JFK or LHR subsidizes any carriers. And also not every Chinese airports offer subsidies. For example, PEK, PVG/SHA and CAN do not offer subsidies. They have more flights than they can handle and flights are constantly delayed for hours because of congestion at those airports. Only second or third tier airports offer subsidies, especially to inter-continental destinations.

HX's problem is from its owner, HNA Group. And HNA Group's problem is that, with easy credit in the last few years, it has literally spent money blindly overseas to buy anything it can get its hands on. It has bought residential lands in Hong Kong and hotels in US. It has acquired Gate Gourmet. It even owned 10% of Deutsche Bank! It used short term loans to fund those purchases. Some of the loans was as short as 6 months, and it kept rolling them over (i.e. negotiating with lenders every 6 months for a new loan to repay the original maturing loan). But with central banks everywhere withdrawing liquidity and raising interest rate, suddenly it no longer can roll over the loans at low rate and as easily. It has been forced to roll over loans at rate that is almost 20% per year.

So now it cannot pay for its operations. There was news a few weeks ago that HNA Group has defaulted on some domestic bonds in China and has offered to repay the bondholders with airline voucher of Hainan Airlines!



PVG subsidy some long haul route like like San Jose and Tel Aviv
CAN subsidy cargo flight
HKG do not subsidy directly but offer discount on landing and parking fee for new airline and new destination
 
Breathe
Posts: 699
Joined: Sat Mar 18, 2017 8:06 pm

Re: Future of HNA’s Hong Kong Airlines in Doubt

Wed Dec 19, 2018 3:05 pm

Any mention if Swissport will likely be retained or divested?
 
zakuivcustom
Posts: 3568
Joined: Sat Jun 10, 2017 3:32 am

Re: Future of HNA’s Hong Kong Airlines in Doubt

Wed Dec 19, 2018 3:21 pm

Breathe wrote:
Any mention if Swissport will likely be retained or divested?


They're actively trying to divest Swissport. Latest news I can find is from October, though:
https://www.ft.com/content/9c971f8e-cd9 ... 069bde0956

No takers so far, at least for the right price, that is.

chunhimlai wrote:
HKG do not subsidy directly but offer discount on landing and parking fee for new airline and new destination


Well, pretty much every single airports around the world does that anyway (Just taking examples from HKG, AFAIK HX does not have to pay any landing fee at YGJ (Yonago, Japan) or OKJ (Okayama, Japan)). And just look at those money PIT is paying airlines as "incentives" :scratchchin:

Pretty sure it's easier to get some preferred slots at HKG for new airlines going to some relatively unknown destinations also.
 
B-HOP
Posts: 830
Joined: Wed Nov 22, 2000 8:09 pm

Re: Future of HNA’s Hong Kong Airlines in Doubt

Wed Dec 19, 2018 3:30 pm

3AWM wrote:
I would see CX as being the buyer who could derive the most benefit - they could get more slots and drive out a competitor. Are there competition law issues in HK that would stop this.

If DL purchase they could rename it "Pearl River Delta".


There are now competition watchdog in Hong Kong
https://www.compcomm.hk/en/practices/wh ... rview.html

They might reject the deal or for CX to swallow HX/UO give up at least a large proportion of its slot
Live life to max!!!
 
zakuivcustom
Posts: 3568
Joined: Sat Jun 10, 2017 3:32 am

Re: Future of HNA’s Hong Kong Airlines in Doubt

Thu Dec 20, 2018 4:36 pm

Well, more news (Chinese only...)

https://hk.finance.appledaily.com/finan ... 0/59050856

Basically tons of bond due to mature next year (First one, a 550M USD bond, due in January), most of them having crazily high YTM (46%?). In another word, a bunch of bond in near-junk (if not junk) status.

That being said, it doesn't necessarily means HX/UO is going out of business as-is (There are always some investors looking to invest in junk bonds), and HX/UO still hold valuable assets like AOC and HKG slots, so there possibly be some investors looking to jump in. That being said, without HNA backing them with money like it used to (b/c, well, there are not really any money further up the chain in HNA Group), things are definitely not looking all that great.
 
Obzerva
Posts: 501
Joined: Wed Jan 11, 2017 3:48 am

Re: Future of HNA’s Hong Kong Airlines in Doubt

Thu Dec 20, 2018 9:52 pm

Interesting that HNA's chairman has said that HNA's asset sales are concentrated in non airline businesses and they're trying to retain the airlines.
viewtopic.php?f=3&t=1411059

Having said that, I'm sure if the price was right an airline could be also be available.
 
OB1504
Posts: 3988
Joined: Tue Jul 27, 2004 5:10 am

Re: Future of HNA’s Hong Kong Airlines in Doubt

Fri Dec 21, 2018 8:29 am

zakuivcustom wrote:
Breathe wrote:
Any mention if Swissport will likely be retained or divested?


They're actively trying to divest Swissport. Latest news I can find is from October, though:
https://www.ft.com/content/9c971f8e-cd9 ... 069bde0956

No takers so far, at least for the right price, that is.


I’ll buy it.

I guess they’re not going to go public with Swissport after all.
 
User avatar
SCFlyer
Posts: 630
Joined: Tue Oct 23, 2018 11:14 pm

Re: Future of HNA’s Hong Kong Airlines in Doubt

Fri Dec 21, 2018 8:37 am

Obzerva wrote:
Interesting that HNA's chairman has said that HNA's asset sales are concentrated in non airline businesses and they're trying to retain the airlines.
viewtopic.php?f=3&t=1411059

Having said that, I'm sure if the price was right an airline could be also be available.


Taking into consideration the mention of NH as a dark-horse for the HNA stake back in September in the Blue Swan Daily. I do wonder what HNA's future decisions would mean for VA considering HNA's 19% stake in the carrier (along with the AU-HKG JV with sister companies HX/UO).

In the very slim chance that the NH dark-horse mention comes to fruition, the Blue Swan article mentioned mostly focusing on domestic expansion and a bit of "international adjustments" (e.g swapping out SYD/MEL-HKG for MEL/BNE-HND/NRT in a potential NH/VA JV).

NH source: https://blueswandaily.com/is-an-ana-par ... the-cards/
 
zakuivcustom
Posts: 3568
Joined: Sat Jun 10, 2017 3:32 am

Re: Future of HNA’s Hong Kong Airlines in Doubt

Fri Dec 21, 2018 8:41 am

Obzerva wrote:
Interesting that HNA's chairman has said that HNA's asset sales are concentrated in non airline businesses and they're trying to retain the airlines.
viewtopic.php?f=3&t=1411059

Having said that, I'm sure if the price was right an airline could be also be available.


Meh, not like the chairman has much choice. If the CCP tell you to do things that way, you better do, unless you want to “disappear” or die of some mysterious cause (like, well, his former colleague Wang Jian that die from that fall in France in an “accident”. Surprised that no netizens in China is buying that? I am not.)

And BTW, of course HX is saying that “everything is fine”, except when, well, it is far from rosy.

https://m.scmp.com/news/hong-kong/hong- ... -stay-amid
 
scootaway
Posts: 11
Joined: Wed Apr 05, 2017 1:07 am

Re: Future of HNA’s Hong Kong Airlines in Doubt

Fri Dec 21, 2018 10:18 am

Obzerva wrote:
Interesting that HNA's chairman has said that HNA's asset sales are concentrated in non airline businesses and they're trying to retain the airlines.
https://www.airliners.net/forum/viewtop ... &t=1411059

Having said that, I'm sure if the price was right an airline could be also be available.


The perfect opportunity for QF to finally gain the foothold it needed in HKG against CX.

Renaming it to Jetstar can come later.
 
zakuivcustom
Posts: 3568
Joined: Sat Jun 10, 2017 3:32 am

Re: Future of HNA’s Hong Kong Airlines in Doubt

Fri Dec 21, 2018 1:01 pm

scootaway wrote:
Obzerva wrote:
Interesting that HNA's chairman has said that HNA's asset sales are concentrated in non airline businesses and they're trying to retain the airlines.
viewtopic.php?f=3&t=1411059

Having said that, I'm sure if the price was right an airline could be also be available.


The perfect opportunity for QF to finally gain the foothold it needed in HKG against CX.

Renaming it to Jetstar can come later.


Or Temasek Holdings can get really serious in throwing money into HNA, or even just buying HX/UO. HX remain Hong Kong Airlines but get a livery more similar to SQ. Cabin Crew (at least the female one) become “Hong Kong Girl”, with a “HK Girl” attitude as part of the sale point :duck: . HKExpress will merge with Scoot, then Scoot can use a giant base in HK for more flights to NE Asia, restart HNL via HKG, etc.

Ok, I can dream, can’t I?
 
B1168
Posts: 507
Joined: Tue Dec 18, 2018 10:26 pm

Re: Future of HNA’s Hong Kong Airlines in Doubt

Fri Dec 21, 2018 1:09 pm

chunhimlai wrote:
raylee67 wrote:
MaverickM11 wrote:
Are there any subsidies for airlines in HKG like there are in every Chinese city?

No. HKG is a high yield destination. In 2017, it was the 8th busiest airport in the world in terms of number of passengers, logging over 72 million passengers for the year. It doesn't need subsidies to get airlines to fly there. It's like asking if JFK or LHR subsidizes any carriers. And also not every Chinese airports offer subsidies. For example, PEK, PVG/SHA and CAN do not offer subsidies. They have more flights than they can handle and flights are constantly delayed for hours because of congestion at those airports. Only second or third tier airports offer subsidies, especially to inter-continental destinations.

HX's problem is from its owner, HNA Group. And HNA Group's problem is that, with easy credit in the last few years, it has literally spent money blindly overseas to buy anything it can get its hands on. It has bought residential lands in Hong Kong and hotels in US. It has acquired Gate Gourmet. It even owned 10% of Deutsche Bank! It used short term loans to fund those purchases. Some of the loans was as short as 6 months, and it kept rolling them over (i.e. negotiating with lenders every 6 months for a new loan to repay the original maturing loan). But with central banks everywhere withdrawing liquidity and raising interest rate, suddenly it no longer can roll over the loans at low rate and as easily. It has been forced to roll over loans at rate that is almost 20% per year.

So now it cannot pay for its operations. There was news a few weeks ago that HNA Group has defaulted on some domestic bonds in China and has offered to repay the bondholders with airline voucher of Hainan Airlines!


PVG subsidy some long haul route like like San Jose and Tel Aviv
CAN subsidy cargo flight
HKG do not subsidy directly but offer discount on landing and parking fee for new airline and new destination


Do they subsidize HU465/6?
 
Newbiepilot
Posts: 3642
Joined: Tue Aug 30, 2016 10:18 pm

Re: Future of HNA’s Hong Kong Airlines in Doubt

Fri Dec 21, 2018 2:25 pm

raylee67 wrote:
MaverickM11 wrote:
Are there any subsidies for airlines in HKG like there are in every Chinese city?

No. HKG is a high yield destination. In 2017, it was the 8th busiest airport in the world in terms of number of passengers, logging over 72 million passengers for the year. It doesn't need subsidies to get airlines to fly there. It's like asking if JFK or LHR subsidizes any carriers. And also not every Chinese airports offer subsidies. For example, PEK, PVG/SHA and CAN do not offer subsidies. They have more flights than they can handle and flights are constantly delayed for hours because of congestion at those airports. Only second or third tier airports offer subsidies, especially to inter-continental destinations.


I agree in no need for subsidies, but Are you sure HKG is a high yield destination? Busy doesn’t mean high yielding. There is certainly high yielding traffic to HKG, but Hong Kong Airlines doesn’t have the network and customer base to necessarily tap into that market and fully exploit it. HKG yields have been somewhat depressed because there is so much long haul competition. Chinese Airlines dumping long haul capacity has reduced the yield on connecting itineraries. Having a business model that requires undercutting the competition on fares in a very competitive market doesn’t always work.
 
juliuswong
Posts: 2021
Joined: Wed Dec 14, 2016 3:22 am

Re: Future of HNA’s Hong Kong Airlines in Doubt

Fri Dec 21, 2018 2:45 pm

UO A320neo deliveries seems to have stopped for a while, is China Government's cheque only for A330 deliveries but not narrowbody?
- Life is a journey, travel it well -
 
User avatar
chunhimlai
Posts: 617
Joined: Wed Jun 03, 2015 11:03 am

Re: Future of HNA’s Hong Kong Airlines in Doubt

Wed Dec 26, 2018 4:48 am

juliuswong wrote:
UO A320neo deliveries seems to have stopped for a while, is China Government's cheque only for A330 deliveries but not narrowbody?


Seems to be engine issue rather than money
 
sciing
Posts: 205
Joined: Tue Feb 03, 2015 9:54 am

Re: Future of HNA’s Hong Kong Airlines in Doubt

Wed Dec 26, 2018 11:55 am

chunhimlai wrote:
juliuswong wrote:
UO A320neo deliveries seems to have stopped for a while, is China Government's cheque only for A330 deliveries but not narrowbody?


Seems to be engine issue rather than money

MSN 8371 and 8430 were delivered/fly to lessors! They were not taken up by HK Express.
There is no engine issue anymore. The number of gliders is 0.
 
User avatar
c933103
Posts: 4656
Joined: Wed May 18, 2016 7:23 pm

Re: Future of HNA’s Hong Kong Airlines in Doubt

Mon Dec 31, 2018 7:22 am

HNA just filed a lawsuit against an HX subsidiary at a court of Hong Kong, asking them to repay 110 Million USD principal and all associated fee for the bond they brought from the company 8 years ago.
It's pointless to attempt winning internet debate. 求同存異. よく見て・よく聞いて・よく考える
(≧▽≦) Nyan! Nyan! Nyan! Nyan! Nyan! Nyan! Nyan! Nyan!
(≧▽≦) Meow Meow Meow! Meow Meow Meow Meow!
 
User avatar
c933103
Posts: 4656
Joined: Wed May 18, 2016 7:23 pm

Re: Future of HNA’s Hong Kong Airlines in Doubt

Mon Dec 31, 2018 7:25 am

sciing wrote:
chunhimlai wrote:
juliuswong wrote:
UO A320neo deliveries seems to have stopped for a while, is China Government's cheque only for A330 deliveries but not narrowbody?


Seems to be engine issue rather than money

MSN 8371 and 8430 were delivered/fly to lessors! They were not taken up by HK Express.
There is no engine issue anymore. The number of gliders is 0.

Those 320neo delivered by now have been causing a lot of irregularity in operation and caused the airlines to be placed under the city's civil aviation authority watch list with numerous restrictions in operation. I don't think they want these planes anymore until those issues get fully fixed.
It's pointless to attempt winning internet debate. 求同存異. よく見て・よく聞いて・よく考える
(≧▽≦) Nyan! Nyan! Nyan! Nyan! Nyan! Nyan! Nyan! Nyan!
(≧▽≦) Meow Meow Meow! Meow Meow Meow Meow!
 
juliuswong
Posts: 2021
Joined: Wed Dec 14, 2016 3:22 am

Re: Future of HNA’s Hong Kong Airlines in Doubt

Mon Dec 31, 2018 7:45 am

c933103 wrote:
HNA just filed a lawsuit against an HX subsidiary at a court of Hong Kong, asking them to repay 110 Million USD principal and all associated fee for the bond they brought from the company 8 years ago.

Lolx, wouldn't it be left to right pocket??
- Life is a journey, travel it well -
 
User avatar
c933103
Posts: 4656
Joined: Wed May 18, 2016 7:23 pm

Re: Future of HNA’s Hong Kong Airlines in Doubt

Mon Dec 31, 2018 8:06 am

juliuswong wrote:
c933103 wrote:
HNA just filed a lawsuit against an HX subsidiary at a court of Hong Kong, asking them to repay 110 Million USD principal and all associated fee for the bond they brought from the company 8 years ago.

Lolx, wouldn't it be left to right pocket??

HNA have already transferred most of its share in HX to an offshore company with unknown background during earlier phase of the HNA debt problem. No one know whether the new company that control a majority part of HX is currently related to HNA or not, or if they are related then how.
It's pointless to attempt winning internet debate. 求同存異. よく見て・よく聞いて・よく考える
(≧▽≦) Nyan! Nyan! Nyan! Nyan! Nyan! Nyan! Nyan! Nyan!
(≧▽≦) Meow Meow Meow! Meow Meow Meow Meow!
 
User avatar
c933103
Posts: 4656
Joined: Wed May 18, 2016 7:23 pm

Re: Future of HNA’s Hong Kong Airlines in Doubt

Mon Dec 31, 2018 8:07 am

juliuswong wrote:
c933103 wrote:
HNA just filed a lawsuit against an HX subsidiary at a court of Hong Kong, asking them to repay 110 Million USD principal and all associated fee for the bond they brought from the company 8 years ago.

Lolx, wouldn't it be left to right pocket??

HNA have already transferred most of its share in HX to an offshore company with unknown background during earlier phase of the HNA debt problem. No one know whether the new company that control a majority part of HX is currently related to HNA or not, or if they are related then how.

Granted, it still seems like they're sharing same office address from the lawsuit filing
It's pointless to attempt winning internet debate. 求同存異. よく見て・よく聞いて・よく考える
(≧▽≦) Nyan! Nyan! Nyan! Nyan! Nyan! Nyan! Nyan! Nyan!
(≧▽≦) Meow Meow Meow! Meow Meow Meow Meow!
 
sciing
Posts: 205
Joined: Tue Feb 03, 2015 9:54 am

Re: Future of HNA’s Hong Kong Airlines in Doubt

Mon Dec 31, 2018 10:40 am

c933103 wrote:
sciing wrote:
chunhimlai wrote:

Seems to be engine issue rather than money

MSN 8371 and 8430 were delivered/fly to lessors! They were not taken up by HK Express.
There is no engine issue anymore. The number of gliders is 0.

Those 320neo delivered by now have been causing a lot of irregularity in operation and caused the airlines to be placed under the city's civil aviation authority watch list with numerous restrictions in operation. I don't think they want these planes anymore until those issues get fully fixed.


They do not take up fixed ones. So what what you wrote makes no sense to me. If there are technical issues the lessor would have blocked delivery too, wouldn‘t they?
 
zakuivcustom
Posts: 3568
Joined: Sat Jun 10, 2017 3:32 am

Re: Future of HNA’s Hong Kong Airlines in Doubt

Mon Dec 31, 2018 2:56 pm

Some more details:
https://www.scmp.com/news/hong-kong/tra ... g-airlines

HX themselves are claiming that "Hong Kong Airlines Consultation Service" is not related to HX (the airline business) itself, even though the owner of that "Consulting Company" by one of the former HX director.

On the other hand, I did found this article from few days ago (It's in Chinese...)
https://m.mingpao.com/fin/instantf2.php ... 5-pWVf7lts

Where the CEO basically admit that there are "some 'small' problems" but of course, everything is fine. The "problem" being one of the stockholder's background (HNA Group? Zhong Guosong who's the one being sued? Or some high up CCP official? Nobody really knows).

c933103 wrote:
HNA have already transferred most of its share in HX to an offshore company with unknown background during earlier phase of the HNA debt problem. No one know whether the new company that control a majority part of HX is currently related to HNA or not, or if they are related then how.


Indeed - people had always said how HX (and HNA in general) are anything but transparent, with a very opaque company structure and quite frankly, nobody outside really knows who owns what, where their money came from (all those high interest loans?), and their exact finance. Multiple rumors linked HNA to Wang Qishan (The current VP of PRC), and perhaps, CCP is trying as hard as they could to cover up the fact that the former anti-corruption chief (Wang) is possibly involved in a giant corruption/money laundering machine (HNA Group)?
 
smartplane
Posts: 1562
Joined: Fri Aug 03, 2018 9:23 pm

Re: Future of HNA’s Hong Kong Airlines in Doubt

Mon Dec 31, 2018 6:46 pm

Obzerva wrote:
Interesting that HNA's chairman has said that HNA's asset sales are concentrated in non airline businesses and they're trying to retain the airlines.
https://www.airliners.net/forum/viewtop ... &t=1411059

Having said that, I'm sure if the price was right an airline could be also be available.

Trying to retain airline businesses, or can't sell / less saleable?

Financiers encourage listing of the most attractive assets, like GE has done for the last year with it's engine division.

Senior management place high values on 'for sale' assets, in the hope they don't sell, and instead financiers inject more funds.

Eventually, one of 5 scenarios:
1. Financiers inject more funds.
2. Financiers take control, re-price and sell attractive assets. Orderly re-launch / downsize of remaining businesses.
3. A knight with deep pockets arrives on the scene, perhaps A or B if orders weren't shared.
4. Fortunes reverse - business model becomes highly profitable.
5. Politics - 1 to 4 or something else.
 
User avatar
c933103
Posts: 4656
Joined: Wed May 18, 2016 7:23 pm

Re: Future of HNA’s Hong Kong Airlines in Doubt

Fri Jan 04, 2019 11:16 pm

According to report, insurance company BlueCross will stop providing coverage for HX for any new customers buying their insurance that include protection against airlines closure, starting from Monday.
smartplane wrote:
Obzerva wrote:
Interesting that HNA's chairman has said that HNA's asset sales are concentrated in non airline businesses and they're trying to retain the airlines.
https://www.airliners.net/forum/viewtop ... &t=1411059

Having said that, I'm sure if the price was right an airline could be also be available.

Trying to retain airline businesses, or can't sell / less saleable?

Financiers encourage listing of the most attractive assets, like GE has done for the last year with it's engine division.

Senior management place high values on 'for sale' assets, in the hope they don't sell, and instead financiers inject more funds.

Eventually, one of 5 scenarios:
1. Financiers inject more funds.
2. Financiers take control, re-price and sell attractive assets. Orderly re-launch / downsize of remaining businesses.
3. A knight with deep pockets arrives on the scene, perhaps A or B if orders weren't shared.
4. Fortunes reverse - business model becomes highly profitable.
5. Politics - 1 to 4 or something else.

It's part of the Chinese government demand for HNA to keep their focus on airlines business and not to diverge to other businesses as a condition to help HNA
It's pointless to attempt winning internet debate. 求同存異. よく見て・よく聞いて・よく考える
(≧▽≦) Nyan! Nyan! Nyan! Nyan! Nyan! Nyan! Nyan! Nyan!
(≧▽≦) Meow Meow Meow! Meow Meow Meow Meow!
 
LewisNEO
Posts: 250
Joined: Thu Jan 05, 2017 12:08 pm

Re: Future of HNA’s Hong Kong Airlines in Doubt

Wed Jan 09, 2019 12:08 pm

https://www.scmp.com/news/hong-kong/tra ... e-starting

HONG KONG Airlines states in the press 2018 “We deplore the untrue and groundless speculations about Hong Kong Airlines ceasing operation and applying for liquidation. We reserve the right to take legal action against those who deliberately create these rumours,”

To be continued.
You are the wind beneath my wings.

Fokker 27, Bombardier Dash 8, Embraer 175 & 195, 727-200, 737-200 & -300 & -400 & -800, 747-400, 767-300, 767-400, DC 10-30, A320-200, A330-200, A330-300, A380.
 
User avatar
GCT64
Posts: 1852
Joined: Sun Nov 04, 2007 6:34 pm

Re: Future of HNA’s Hong Kong Airlines in Doubt

Wed Jan 09, 2019 1:31 pm

The HK government seems concerned:

https://www.scmp.com/news/hong-kong/tra ... gency-plan

"Hong Kong Airlines: government considers contingency plan for possible Lunar New Year shutdown
Carrier says it has not been informed by the government or involved in any contingency planning"
Flown in: A20N,A21N,A30B,A306,A310,A319,A320,A321,A332,A333,A343,A346,A359,A388,BA11,BU31,(..56 more types..),VC10,WESX

Who is online

Users browsing this forum: aaron1011, Baidu [Spider], Bobby27ph, cskok8, Iemand91, KWI, Luxair747SP, MikeyESSA, MrHMSH, oakleaf1, PERA346, raumfahrt82, tphuang, ZK-NBT and 144 guests

Popular Searches On Airliners.net

Top Photos of Last:   24 Hours  •  48 Hours  •  7 Days  •  30 Days  •  180 Days  •  365 Days  •  All Time

Military Aircraft Every type from fighters to helicopters from air forces around the globe

Classic Airliners Props and jets from the good old days

Flight Decks Views from inside the cockpit

Aircraft Cabins Passenger cabin shots showing seat arrangements as well as cargo aircraft interior

Cargo Aircraft Pictures of great freighter aircraft

Government Aircraft Aircraft flying government officials

Helicopters Our large helicopter section. Both military and civil versions

Blimps / Airships Everything from the Goodyear blimp to the Zeppelin

Night Photos Beautiful shots taken while the sun is below the horizon

Accidents Accident, incident and crash related photos

Air to Air Photos taken by airborne photographers of airborne aircraft

Special Paint Schemes Aircraft painted in beautiful and original liveries

Airport Overviews Airport overviews from the air or ground

Tails and Winglets Tail and Winglet closeups with beautiful airline logos