HNA Tries to Offload Airbus Planes to Leasing Firms

(Bloomberg) -- HNA Group Co. has been trying for months to offload jetliners it ordered from Airbus SE, according to people familiar with the matter, as the indebted airline-turned-global acquirer wrestles with liquidity challenges.

The Chinese group asked the leasing arms of Industrial & Commercial Bank of China Ltd. and China Minsheng Banking Corp., among others, to take over at least 10 plane orders, the people said, asking not to be identified discussing a private matter. Talks about the A330 twin-aisle jets, due to be delivered this year, date back to at least April, they said.

Representatives of HNA and the leasing division of ICBC didn’t immediately respond to requests for comment. Minsheng wasn’t immediately reachable. An Airbus spokesman declined to comment.

Aircraft deals are notoriously difficult to exit as they carry significant penalties for customers looking to cancel orders, partly because of the disruption caused to the planemaker’s production lines. The wide-body A330 has a list price of as much as $264 million, though airlines typically get significant discounts.

The jets would be part of one of China’s biggest corporate garage sales ever. HNA has agreed to sell more than $22 billion in assets this year, according to a Bloomberg tally, as the group trembles under the weight of more than $77 billion in debt.

Commercial Talks

Airbus Chief Financial Officer Harald Wilhelm revealed on an earnings call Wednesday that the European company is in commercial talks with a customer regarding A330 deliveries, without saying if that was a reference to HNA.

Handovers to some of HNA’s subsidiary airlines were halted in the first half because of non-payment, a person familiar with the matter said in July. Seven A330s had been shipped by the end of September, according to Airbus data compiled by Bloomberg; even so, just 31 of 60 global A330 deliveries planned for this year had been made through the third quarter.

Airbus also disclosed that delays at engine provider Rolls-Royce Holdings Plc have put the revamped A330neo -- the successor model to the HNA jets -- behind target, just as it’s struggling to meet full-year production goals amid issues with other aircraft.

HNA’s original A330 deal was signed during a 2015 visit by German Chancellor Angela Merkel to China, where Airbus inked deals with carriers for 75 of the wide-body planes.

Though HNA has been reversing a buying spree by selling everything from shares to buildings, its disposal of planes stands out because the group’s core is aviation.

Even that business hasn’t been off limits as HNA agreed in August to divest a 30 percent stake in the Avolon Holdings Ltd. jet-leasing unit. It’s also said to be seeking to sell a fleet of private jets, including its heavily kitted out Dream Jet -- a Boeing Co. 787 that’s available to rent from $70,000-an-hour.

To contact Bloomberg News staff for this story: Haze Fan in Beijing at hfan40@bloomberg.net;Dong Lyu in Beijing at dlyu3@bloomberg.net;Benjamin Katz in London at bkatz38@bloomberg.net

©2018 Bloomberg L.P.

With assistance from Editorial Board