HNA's problems mount as airlines delay payments: Sources

SHANGHAI • Some airlines affiliated with China's HNA Group are delaying aircraft lease payments to lessors, and Export-Import Bank of China, which is a long-term financer of the group, has formed a team to handle the conglomerate's liquidity issues, several banking and leasing sources said.

Executives from leasing units of Chinese lenders, including Bank of China, China Minsheng Banking Corp and Bank of Communications, have held talks with some HNA-linked airlines to recover payments, the sources said.

"Some payments have been delayed by over two months," said a senior Beijing-based executive at a Chinese lessor. He said HNA airlines had informed the lessor that payments would be made soon as they expected banks to support HNA in the coming months.

HNA, an aviation-to-financial services conglomerate, said in a statement: "HNA and its subsidiaries are maintaining stable operations, and are in the process of gradually paying each lessor's fees as planned."

HNA's US$50 billion (S$66 billion) worth of deal-making over the past two years, which included investments in Deutsche Bank and the Hilton hotels group, has sparked intense scrutiny of its opaque ownership and use of leverage.

In June, the Chinese government told major banks to review their credit exposure to HNA and a handful of other non-state companies, putting pressure on its finances.

Some sources from lessors and banks said HNA's flagship Hainan Airlines and smaller ones, including Lucky Air and Capital Airlines, had missed payments, while Tianjin Airlines was seeking to extend the term for payments due this year.

Lucky Air, Capital Airlines and Tianjin Airlines said in separate statements that they maintained good relationships with their respective lessors and were operating safely and stably.

Hainan Airlines suspended trading on Jan 10 pending an announcement. Tianjin Airlines has asked a Chinese lessor to delay June rental payments for three aircraft, said a source with direct knowledge.

Underlining the growing concern by lenders over the group's repayment obligations, the Beijing-based Exim set up a team this month to handle HNA's debt, which the conglomerate is struggling to repay, banking sources said.

REUTERS

A version of this article appeared in the print edition of The Straits Times on January 17, 2018, with the headline 'HNA's problems mount as airlines delay payments: Sources'. Print Edition | Subscribe