business

Airbus Has Taken Pre-Payments From HNA's Hainan Air, Leahy Says

  • Advances of ‘hundreds of millions of dollars’ cover exposure
  • Chinese conglomerate faces regulatory scrutiny, debt questions
Airbus COO John Leahy discusses the progress of a deal with Emirates and his outlook for the company overall.

Airbus SE has received “hundreds of millions of dollars” in pre-delivery payments from carriers under the Hainan Airlines Holding Co. umbrella and is sufficiently protected from any financial risks involving the customer, John Leahy, the European planemaker’s chief of sales, said in an interview.

“We build airplanes so you’d have an industrial risk if they were to get into some serious financial difficulty,” he told Bloomberg Television’s Guy Johnson on Friday. “We have airplanes coming down the assembly line for airlines in the Hainan group, but we also have pre-delivery payments -- significant, hundreds of millions of dollars in pre-delivery payments to cover our industrial exposure. So we wouldn’t be that directly impacted” by any crisis tied to the Chinese company.

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Leahy’s comments were in response to a query of whether strained finances at HNA Group Co., the parent of Hainan Airlines, would weigh on the orders the carriers have placed with Toulouse, France-based Airbus. The Chinese conglomerate has been battling scrutiny of regulators about its ownership and has faced mounting difficulties in its ability to repay debt following a $40 billion acquisition spree that inflated interest costs.

With uncertainties lingering around the conglomerate, some subsidiaries missed payments to several Chinese banks in recent weeks, people with knowledge of the matter said this month.

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The carriers in which Hainan Airlines holds a stake include Yunnan Lucky Air Co., Tianjin Airlines Co., Air Chang’an, Shanxi Airlines and Urumqi Air.

— With assistance by Benjamin D Katz, Dong Lyu, and Prudence Ho

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