News
Hainan Airlines reports US$525 million 2017 profit as intercontinental network expands
March 23rd 2018
No week goes by without major news from Hainan Airlines and its parent, China’s HNA Group. Read More » The conglomerate has obligations to service maturing debt in excess of US$20 billion this year. HNA has been selling off assets and has renegotiated payment terms with creditors, but the group is still several billion dollars short. This week, HNA reportedly collected US$2.2 billion from the sale of nine housing properties in Beijing and Shanghai.
But there was some respite for the group this week when its flagship carrier, Hainan Airlines, reported a CNY3.32 billion (US$525 million) net profit for 2017, up 5.9% year-on-year, on revenues of CNY59.9 billion.
Despite the stretched financial situation of the group, Hainan Airlines this week announced two new long-haul destinations from Beijing. From June 12, the carrier will operate twice a week Beijing-Edinburgh-Dublin and twice a week Beijing-Dublin-Edinburgh flights, both served by two-class A330-300s. Hainan Airlines will hold monopolies to both destinations, but will compete with Aer Lingus and Ryanair on the Edinburgh-Dublin fifth freedom sectors.
From June 2 Cathay Pacific Airways will commence Hong Kong–Dublin four times a week with A350s, the first route from the Irish capital to connect directly with the Asia-Pacific, but the record will only last for 10 days following Hainan’s announcement. The Mainland carrier also launched three times a week Changsha-London Heathrow today.
In Shenzhen, Hong Kong’s Southern China neighbour, the carrier and its partners, the Shenzhen Bao’an International Airport and the Transport Commission of Shenzhen Municipality, are committed to launch an intercontinental route and two regional destinations from the airport by 2020. The carrier also plans to base more aircraft in Shenzhen, including 15 wide bodies, in the next 24 months.
The Shenzhen municipal government hands out annual subsidies in excess of CNY100 million (US$15.8 million) to airlines that launch intercontinental flights from the city.
On Monday, the full-service carrier launched twice a week Shenzhen-Sihanoukville, followed by twice a week Shenzhen-Brussels on Tuesday and twice a week Shenzhen-Madrid yesterday. It also inaugurated three flights a week between Beijing and Tijuana-Mexico City on Wednesday.
Some analysts interpret the Hainan’s flurry of new international routes to Europe as a direct attack on Cathay. From this Sunday, Cathay will commence flying four times a week to Brussels with A350s after it announced its service to the Belgium capital as well as Dublin last August.
Separately, Hainan Airlines paid US$475 million to South China Bluesky Aviation Oil, a subsidiary of China National Aviation Fuel Group, to settle a debt that threatened to halt supplies of aviation kerosene to Hainan Airlines. The debt has been pending since last October.
