Cargolux’s helmsman Richard Forson has unveiled details of the Henan Cargo Airlines (HCA) project, his carrier will hold 25 percent of the shares. The contract for setting the newcomer on track was signed on 11 June in Beijing by its future stakeholders, much applauded by the attending Chinese and Luxembourgian politicians.
Cargolux will invest US$55 million in Henan Cargo Airlines, this way securing its capital share of 25 percent. The funding will take place in two stages: a direct transfer of US$20 million paid
by CV and the remainder in loans granted by Cargolux to Henan Cargo Airlines amounting to US$35 million, refundable after 3 or 4 years.
Unlevelled playing field
Originally, the Luxembourg-headquartered carrier intended to acquire 35 percent of the newcomer’s share capital, but had to settle for 25 percent, because of the legal cap for foreign investments by airlines mandated by Beijing’s government. “This law existed before. “We had hoped the regulator would make an exception, due to the holding by HNCA in Cargolux, permitting us to acquire a 35 percent stake in the new carrier as formerly intended,” Richard states.
This is a visible example of an unlevelled playing field existing between European countries and China since Cargolux’s Chinese partner Henan Civil Aviation Development and Investment Company (HNCA) holds 35 percent in CV’s capital share.
Right from the start of the project in 2014 until last week, the entire industry spoke of “Cargolux China” when this topic was discussed. However, to the surprise of many, this name disappeared all of a sudden and was replaced by “Henan Airlines Cargo.” Explains Forson: The renaming of the project is a result of discussions with representatives of HNCA as it is the majority shareholder in the airline as well as the 16% stake held by the other 2 Chinese shareholders. The future name, he says, demonstrates the majority ownership of the Chinese side in Henan Airlines Cargo (75 percent). Therefore, it seems to be a gesture of respect and good will prompting minority stakeholder Cargolux (25 percent) to waive the originally proposed name and support the new brand.
Three Boeing 747-400Fs right from the start
Touching the fleet issue, CEO Forson speaks of three Boeing 747-400 freighters that will be operated at the initial phase of the newcomer, who will take to the air during the last quarter of 2018, if all goes well. Henan Cargo Airlines intends adding two 47-400Fs to its fleet two years after the initial launch. It will be a mix of purchased and leased all-cargo aircraft, Mr Forson states.
Recruiting sufficient pilots, needed are 60 for the initial three freighters, could be a major issue because much depends on the availability of local cockpit personnel because there is a shortage of pilots in the Chinese sourcing market. Optionally, foreign Captains and First Officers will have to be recruited or the outcome might be a hybrid solution of locals and expats.
Flying transpacific and to Australia
Once operational, Henan Cargo Airlines will serve transpacific routes, linking its home base Zhengzhou with typical cargo destinations in the U.S., such as Los Angeles, Chicago, Houston, New York or Atlanta. However, Mr. Forson emphasizes that the future network has taken into account all major cargo hubs in the US. He adds to this that Australia is also among the prospects of the newcomer. Intra-Asian flights will be considered once HCA’s fleet is expanded, Richard adds.
Up to this point, it is still an entirely open question who will ultimately run the company and which managers will get seats on the freight carrier’s executive board. “This is still an extremely confidential issue,” states CV’s CEO. Well knowing that this topic will be subject to persistent speculation in the months ahead.