Cathay Pacific has reportedly delayed its first payment to the HNA Group for the purchase of low-cost carrier, HK Express over the issue of the disposal of at least one B747-400SF freighter.
Cathay was due to pay HKD 1.2 billion (USD 153 million) to the debt-riddled Chinese conglomerate on 8 May, but reportedly withheld the payment over HK Express failure to dispose of at least one B747 freighter that had been acquired under ‘murky circumstances’, Forbes reports, quoting sources close to the issue.
The issue exposed what for many observers was a complete surprise – the fact that low-cost carrier HK Express owns not one, but two and possibly three B747-400SF freighters.”
The ‘murky’ circumstances around the purchase of three freighters has been the subject of legal proceedings where many of the details have emerged. The controversy centres around alleged bribery in the process of acquiring the second-hand aircraft by a New York-based broker of the deal.
The issue exposed what for many observers was a complete surprise – the fact that low-cost carrier HK Express owns not one, but two and possibly three B747-400SF freighters.
The aircraft are leased to Turkish cargo airline ACT Airlines – in which HNA Group purchased a 49 per cent stake in 2011 and was subsequently rebranded as myCargo.
In August 2017 HNA swapped its shares in MyCargo for another subsidiary in Turkey, leading to airline going back to full Turkish ownership and operating as ACT Airlines once again, with the fleet gradually being rebranded.
The two aircraft were purchased in 2007 along with a third B747 that is currently operated by HNA’s Suparna Airlines in mainland China. But as Forbes notes, the current ownership of that third aircraft is unclear.
All three aircraft were on financial lease with CDB Leasing, which said the lease ended in the second half of 2018.
As for Cathay, it wants HK Express to dispose of all of the B747s in order to distance itself from legal problems related to the acquisition of the freighters as well as general mire of HNA’s ongoing debt problems.
HNA is racing to sell off assets after agreeing to a Chinese government deadline to restructure and sell some USD 25 billion in assets after a debt-fuelled spending frenzy involving high-value assets outside of its core aviation businesses drove the group into serious financial trouble.