HNA airlines are missing payments as financial issues deepen
Chinese banks and lenders are holding talks with some of HNA-affiliated airlines over their missing payments, Reuters reports. The news support the rumors that the HNA Group conglomerate is facing liquidity issues at a time when its unclear ownership structure is attracting global attention and scrutiny.
Some undisclosed airlines, affiliated with the Chinese HNA Group, are missing aircraft lease payments for two or more months, according to Reuters. The publication makes a note that the airlines are expecting to make payments as soon as HNA secures support by banks, while the Group itself claims that operations are running stable and “are in the process of gradually paying each lessor’s fees as planned.”
Similar information regarding the missed payments of HNA affiliated entities (units) - including Hainan Airlines - was reported in the middle of December 2017. Back then, an unnamed executive at Chinese Citic Bank explained to the media that the liquidity problems of HNA Group were caused by concurring due-dates of various loans and debts HNA has with multiple financial institutions. The Group denied having delayed payments and claimed to have a “healthy and stable debt structure”.
The latest news comes as another sign of possible cash shortage the Chinese conglomerate might be facing. A similar conclusion was pointed out by the Financial Times, which observed that interest payments offered by HNA for short-term financing are “unusually high”. Switzerland, the United States, and China are among the countries questioning the HNA Group practices, including its overseas acquisitions, accuracy of disclosed information and possible failures to provide important information.
The Chinese government stepped up the financial operations supervision of the HNA Group in autumn 2017. Its multi-billion leverage-based spending on overseas companies, sourced from domestic funds, has raised the government’s concerns about risk accumulation. For this reason, in October 2017 the company, and all its subsidiaries were banned from receiving funds from its insurance arm Bohai Life Insurance.
HNA Group is a Chinese conglomerate based in Hainan province. The group has stakes and control in various Chinese and overseas airlines, including Hainan Airlines, HK Express, Brazilian Azul Airlines, Aigle Azur, etc. The group is also known for its aggressive investment fueled by debt in overseas companies that include Deutsche Bank and Hilton Holdings. With $50 billion spent during the past two years, HNA Group is one of four biggest Chinese spenders, according to South China Morning Post.
IATA: Aviation industry to end 2020 with $118 billion loss
As the current crisis continues, the International Air Transport Association (IATA) announced a worsening forecast for t...
easyJet: £1.2 billion loss but with a flexible cost structure
The aspect of liquidity represents one of the fundamental elements in the analysis of a financial statement. In the pres...
Vietnam Airlines wins state favor, gets approval for $530M aid
Vietnam Airlines received governmental approval for financial aid worth $520 million. ...
Burning $85M a month, Air New Zealand awards CEO by $2M in shares
Despite burning up to $85 million a month, the CEO of Air New Zealand received a $2 million bonus in the airline’s...
EasyJet records first massive loss in 25-years operating history
EasyJet faced a pre-tax loss of €1.4 billion ‒ the airline’s first loss in 25-years of operating history....