LONDON — It has been revealed that the HNA Group, that runs a few airlines such as Hainan Airlines, Tianjin Airlines, and Lucky Air etc., have been unable to pay for Airbus A330 jets that are due to be delivered to the group.
A cluster of undelivered jets belonging to HNA has been seen near the delivery center near Toulouse.
Airbus currently faces a logjam for these aircraft, valued at around $1 billion following a deadlock over late payments.
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According to Reuters, there have been talks of up to six months but Airbus took the decision to withdraw some aircraft as it does not “want to play the financier”.
Airbus and HNA have not released statements on the matter.
Other sources have said that HNA affiliated carriers are to delay aircraft lease payments to lessors. Carriers such as Hainan, Lucky Air, and Beijing Capital Airlines had missed payments, while Tianjin Airlines are looking to extend the term of payments due this year.
The HNA Group is currently dealing with losses of around $94 billion.
The group is initiating a lot of asset sell-offs and IPOs to raise liquidity in order to manage their debts.
March 2018 revealed that HNA owed the China National Aviation Fuel Group $476 million in fuel bills.
For Airbus, the cost is also rising with them. According to estimates, the daily cost of holding such an asset for the European manufacturer, in terms of lost value, maintenance, and storage costs, is around $10,000 per plane.
Airbus at the moment may be holding around six A330s for Hainan Airlines, Beijing Capital, and Tianjin Airlines respectively.
Airbus is already losing money from the late deliveries of 100+ A320neo single-aisle jets due to the timing of engine deliveries.
Airbus did say that for the A320neo production line, the number of undelivered planes was beginning to come down. The six A330s, however, have a list price of around $1.6 billion.
With HNA recently losing their CEO through his death, it is now down to the executive team at HNA to initiate sell-offs and maybe restructure and downgrade their group as $94 billion is a significant amount of money to reduce in debt.
We will have to see whether the company is able to do so successfully, otherwise, we could see the group’s demise over the next few years.