HNA's problems mount as airlines delay payments, bank sets up team to handle debt: sources
By Engen Tham and Anshuman Daga
SHANGHAI/SINGAPORE (Reuters) - Some airlines affiliated with China's HNA Group Co Ltd 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 Ltd <601988.SS>, China Minsheng Banking Corp Ltd <600016.SS> and Bank of Communications Co Ltd <601328.SS> have held talks with some HNA-linked airlines to recover payments, the sources said.
"Some payments have been delayed by over two months," said one 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 coming months.
HNA, an aviation-to-financial services conglomerate, said in a statement to Reuters: "HNA and its subsidiaries are maintaining stable operations, and are in the process of gradually paying each lessor's fees as planned."
HNA's $50 billion worth of deal-making over the past two years, which included investments in Deutsche Bank <DBkGn.DE> and the Hilton <HLT.N> 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 of the sources from lessors and banks said HNA's flagship Hainan Airlines <600221.SS> 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.
The sources declined to be named because of the sensitivity of the matter.
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.
Bank of Communications Financial Leasing, Minsheng Financial Leasing and EXIM did not respond to requests for comment.
Hainan Airlines suspended trading on Jan. 10 pending an announcement. The reason for the share suspension is unclear.
Tianjin Airlines has asked a Chinese lessor to delay June rental payments for three aircraft, said one source with direct knowledge.
Another source said one HNA-affiliated airline has told Bank of Communications Financial Leasing that it will not be paying rental payments due in January. He did not name the airline.