Despite being the first market to recover and cheer the aviation industry worldwide, China is witnessing its first airline victim going for judicial auction in history.
Longjiang Airlines(LJ Air), an airline only flying for three years, is now being sold online, becoming the first airline in China’s civil aviation history to be auctioned off due to the impact of the epidemic. The company was established on September 3, 2014, and mainly operating domestic flights from Harbin to other cities. At present, it has three A320 aircraft and two A321 aircraft in the fleet, of which one A321 is grounded due to severe engine problems.
The Harbin Intermediate Court in Heilongjiang province conducted a public auction at 10 a.m. on 29th China time on the Jingdong Judicial Auctions website for 98% of the airlines’ equity.
According to the auction website, the item’s starting price was approximately RMB329 million (around USD48.25 million). The auction attracted more than twenty thousand people online to watch the bidding. However, as of 7 p.m. local time, only two people had registered to participate in the auction, making seven bids. The auction is valid for 24 hours and will end at 10 a.m. China time on October 30.
No airlines in China have reported bankruptcy under the COVID-19 impact like other parts of the world because of government support. Three airline groups out of four in the market, namely China Southern Airlines (ZNH), Air China, China Eastern Airlines (CIAH) (CEA), have a governmental background.
The fourth and only private airline group – HNA group, together with the other three groups, had reported a loss of RMB 38 billion (USD 5.57 billion) in the first half of the year. Several smaller private-owned airlines who didn’t have capital, scale, resource advantages like the others under the group umbrella had sought local government’s injection or even sale.