Chinese regulators are getting tough with cash-strapped HNA's Hainan Airlines, but not too tough because they don't want customers causing disturbances at the nation's airports when flights get cancelled.
The Civil Aviation Administration of China has asked HNA Group Co.’s airline businesses to pay overdue bills, including amounts owed for jet fuel and airport fees, according to a person with direct knowledge of the matter.
Authorities from the nation’s air-safety regulator had met with executives of the conglomerate to push for the payments, the person said, asking not to be identified because the discussions were private. The regulator has refrained from further actions to avoid disruptions to flight operations and inconvenience to passengers, the person said.
Representatives for Hainan Airlines and HNA Group couldn’t immediately comment.
Earlier this month, Mingtiandi reported that the group’s flagship Hainan Airlines Holding Co. received an ultimatum from a state-backed fuel supplier to pay all the arrears or have deliveries cut off within days. The carrier must pay everything it owes South China Bluesky Aviation Oil Co. by 4 p.m. on March 16 or supplies will end two days later, the news site said, citing a formal notice.
Haikou, Hainan-based HNA Group is in the midst of more than $10 billion in asset sales after a debt-fueled acquisition spree to snap up everything from Manhattan buildings to a stake in Deutsche Bank AG in the past few years strained its finances. The group is said to have targeted 100 billion yuan ($16 billion) in asset disposals by the first half of the year to ease financial pressures.
South China Bluesky is a unit of state-owned China National Aviation Fuel Group, which has a near-monopoly on jet-fuel distribution on the mainland, according to the Mingtiandi report. The news site said the airline has been missing payments since October but didn’t specify how much Hainan Air owes. Reuters reported last month HNA’s overdue bills from CNAF had climbed to 3 billion yuan.
Shares of Hainan Air have been suspended from trading since January, pending the disclosure of a restructuring plan. It’s one of seven HNA units whose shares have been halted from trading for months.
–With assistance from Prudence Ho
©2018 Bloomberg L.P.
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