Hong Kong Air Expects to `Cordially' Solve Legal Dispute With Plane Lessor

Hong Kong Airlines Ltd., part of the city’s second-largest carrier group, said it will meet Team Cignus Ltd. today to resolve an aircraft lease contract dispute.

“We expect to resolve this cordially,” President Yang Jiang Hong said today in Hong Kong. The airline is currently seeking legal advice with a view to resolve the matter as soon as is practicable.

Team Cignus filed a petition on Dec. 6 to the Hong Kong High Court seeking to liquidate Hong Kong Air to recover payment for an airplane lease, according to a court cause list, which didn’t provide details. Team Cignus is an Ireland-registered unit of Tokyo-based NEC Capital Solutions Ltd.

Team Cignus was owed $1.55 million as of March 31 after it leased an aircraft to Hainan Airlines Co., part-owned by Hong Kong Air parent HNA Group, the South China Morning Post reported today. Hainan Airlines then subleased the aircraft to Hong Kong Air, the newspaper said, citing the leasing company.

“As a sub-lessee Hong Kong Airlines has had no direct contractual relationship with Team Cignus,” the airline said today in an e-mailed statement. The airline “is financially sound in every aspect of its operations,” according to the statement.

NEC Capital Solutions declined to comment because the case is at court, it said by e-mail. The company also didn’t immediately provide contact information by phone for Team Cignus in Ireland.

Hong Kong Air, which is part-owned by the government of southern China’s Hainan province, has said it expects to break even or post a small profit this year. Sales in 2010 may rise by 30 percent to 40 percent, according to the company.

Hong Kong Air and affiliate Hong Kong Express Airways Ltd. operate a combined 17 aircraft, according to the company’s website.

To contact the reporter on this story: Wing-Gar Cheng in Hong Kong at wgcheng@bloomberg.net

To contact the editor responsible for this story: Neil Denslow at ndenslow@bloomberg.net

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