Cathay Pacific Airways is studying a bid for stakes in two smaller Hong Kong Airlines backed by embattled Chinese conglomerate HNA Group Co., Bloomberg reported quoting people with
knowledge of the matter.
The report said Cathay Pacific has held preliminary talks with HNA about acquiring minority stakes in Hong Kong Express Airways and Hong Kong Airlines, adding that according to sources, a couple of local tycoons have also been considering investments in Hong Kong Airlines.
The Bloomberg report noted that Hong Kong Airlines and Hong Kong Express would be attractive because of the routes they have the rights to fly, but it stressed that the suitors'
discussions with HNA have been progressing slowly, and there's no certainty they will result in a transaction.
As reported earlier by CargoForwarder Global, HNA has already sold several assets in an effort to trim one of China's biggest debt piles by selling off various stakes in hotels, banks and aircraft leasing companies. An earlier plan to sell almost a third of its stake in Hong Kong Airlines was held up last year after the accidental death of HNA co-Chairman Wang Jian during a visit to France in August.
Unpaid fees for rented aircraft alarm ATLA
Cathay's interest in the two carriers coincides with demands for details of Hong Kong Airlines’ financial situation by Hong Kong’s airline licensing body, the Air Transport Licensing Authority (ATLA) last week following news that two companies sued it for more than HK$150 million (US$19 million) in unpaid fees for rented planes.
In a statement, the ATLA said it was "gravely concerned" about the situation and added that after getting the facts, it would “take necessary follow-up actions on the matter.”
A report in the South China Morning Post said that the ATLA statement came days after the Irish subsidiary of Wilmington Trust and U.S.-based aircraft leasing company International Lease Finance Corporation (ILFC) took the carrier to the city’s High Court to recover unpaid fees for the rented aircraft.
HNA’s financial situation seems to be worsening
The former sought to recover HK$103 million over the rental of six planes, while ILFC said the airline had failed to pay HK$47.2 million for the lease of two aircraft.
It was the second civil suit facing the carrier in a month, the SCMP report noted. Earlier in February, Luso International Banking, a Macau-based lender, sued the beleaguered airline following its alleged failure to repay a US$20 million loan despite repeated demands.
In a related development, Bloomberg reported last week that the HNA Group has engaged an adviser on the potential disposal of its 80% stake in Swiss aircraft-maintenance firm SR Technics, including a possible sale. HNA’s 80% stake in SR Technics could be valued at US$700 million to US$1 billion, the Bloomberg report said, quoting people who asked not to be identified because the matter is private. It added that HNA is also aiming to sell airport-cargo handler Swissport International as well as container-leasing business Seaco (CargoForwarder Global reported).
Nol van Fenema