HNA Group owned Hainan Airlines is struggling to reach agreement with Airbus over in excess of €1 billion in unpaid debts for completed, but not yet delivered aircraft, mostly A350’s for its Hong Kong subsidiary.
The cash strapped and heavily indebted group has been struggling for almost 9 months now, with $50 billion in debts, collapsed revenues, Chinese currency restrictions, and in effect poorly executed and over priced equity stakes in dozens of business ventures.
The group went on a massive shopping spree in 2015-16 until the Chinese government changed its policies stopping funds leaving the country.
The company suddenly found itself unable to borrow, in huge debt and is being forced to sell much of what it purchased at a loss, if it can find a buyer, which hasn’t been possible in many cases.
HNA tried to isolate the profitable airline but its situation is so dire the airline is one of its only bright spots and a major cash generator, although most of that is burnt up in operational expenses and paying off existing fuel and service debts. The airline is only just keeping ahead of its debt curve and can’t generate enough spare cash to pay Airbus the money it needs.