||GRAND CHINA AIR
Formed in 2004 and started operations in 2007. Domestic, regional, & international, scheduled & charter, passenger & cargo, jet airplane services.
HNA Development Building
29 Haixiu Dadao
570206 Haikou (Hainan), China
China (People's Republic of China) was established in 1949, it covers an area of 9,560,980 sq km, its population is 1,265 million, its capital city is Beijing, and its official language is Chinese.
February 2004: Hainan Airlines (HNA) plans to consolidate with China Xinhua (XIH), ShanXi Aviation (CHG), and ChangAn Airlines (CGN) into one firm based in Beijing and operating under the name "Grand China Air" (CGH).
October 2005: Global financier George Soros agreed to invest +$25M more in Hainan Airlines (HNA), doubling his investment (he had made a $25M investment in (HNA) in 1995 to buy 14.8% of (HNA). The funds will go to Grand China Air (GCA), a carrier (HNA) is putting together by merging three smaller rivals. (HNA), China's fourth-largest carrier, will merge with three smaller airlines - - Xinhua (XIH), ChangAn (CGN) and ShanXi (CHG) - - to form Grand China Air (GCH). An (HNA) spokesperson said that USA financier George Soros agreed over the weekend to invest $25 million for approximately 4% of the new carrier. (HNA) is trying to raise $1.06 billion to buy airplanes and add routes ahead of the 2008 Summer Olympics and the 2010 Shanghai World Expo. USA financier George Soros' $25 million investment into Hainan Airlines (HNA) is aimed at forming a new airline by merging three smaller carriers. Hainan Airlines (HNA) hopes the forming of the new carrier, "Grand China Air" (GCH) will help it to float shares in Hong Kong and raise capital to buy planes and expand routes. Other reports referred to (HNA) setting up a Low-Cost Carrier (LCC) to be named "Lucky Air" (LKY) using 737's from its wholly owned subsidiary Shan'Xi (CHG) and to manage Chongqing Airlines (CHO).
February 2006: Lucky Air (LKY), based at Dali, is leasing 3 737's from Shanxi Airlines (CHG) for domestic routes. It is a joint venture of the (HNA) Group, Shanxi Airlines (CHG) and Shilin Tourism and hopes to begin flying in the 1st quarter.
June 2006: Hainan Airlines (HNA) is planning to set up a regional airline in Tianjin to be named "Grand Air Express" (GCR) and be based at the Tianjin Binhai Airport. (GCR) will operate regional passenger and cargo services leasing at least 5 Dornier 328s from Hainan Airlines (HNA) for its start-up. Within 3 to 5 years, (GCR) hopes to operate 50 to 100 airplanes and become China's largest regional carrier.
April 2007: Hainan Airlines (HNA) parent, (HNA) Group launched its "Grand Xinhua Express Airlines (GXE)" in Tianjin, just southeast of Beijing, from where it initially will operate five 32-seat regional jets. (HNA) holds 81% of the new carrier, with an investment of CNY81 million/$10.5 million, while Hainan Airlines (HNA) invested CNY19 million for the remaining stake. (GXE) is aiming to be China's top regional airline in both passenger and cargo traffic. (GXE) Chairman & President, Yu Wenyong cited "market potential" as the reason for starting the airline, pointing out that "market demand for regional air transport in China is really big now. Currently, more than half of trunk routes with low load factors can be replaced by regional airplanes." He said the company estimates that the number of passengers flying regional routes will climb to 56 million in 2020. An internal source at (HNA) Group said that the company's next step is to integrate regional operations of subsidiary carriers Hainan (HNA), Chang'an Airlines (CHG), Xinhua Airlines (XIH), and Shanxi Airlines (SHX) with (GXE), which will take delivery of the first of 100 Embraer EMB-145s and EMB-190s in September, with the whole order arriving in five years. (HNA) is pursuing an ambitious strategy to "grab two-thirds of China's regional market share by 2012."
China Southern Airlines (GUN) plans to partner with Chongqing Investment Corp to create "Chongqing Airlines" (CGQ) which is expected to launch operations in June with three A320s. The new carrier (CGQ) is expected to be approved by (CAAC) (CAC). (GUN) holds 60% with an investment of CNY720 million/$93 million, while Chongqing Investment has put in CNY480 million for the remaining stake. Chongqing Airlines (CGQ) aims to challenge Air China (BEJ) and China Eastern Airlines (CEA), the two dominant players in western China, for both passenger and cargo traffic. China Southern (GUN) cited its wish to "explore the western China air transport market" as the main reason for the venture, saying the region's market potential "is really big now." In December 2005, (HNA) Group signed a framework agreement with Chongqing Real Estate Group to start a Chongqing Airlines (now renamed "Western Airlines") (CHO). (HNA) planned to hold 75% with an investment of CNY60 million with CREG investing CNY20 million for the remainder. That airline has not been approved by (CAAC) (CAC). (CAAC) (CAC) regulations prohibit two carriers operating under the same name. (HNA) now has said it would cede the name to (GUN) and call its new carrier "Western Airlines" (CHO) instead.
"Grand China Air" (GCH) the company established in 2004, combining (HNA) Group's Hainan Airlines (HNA), Xinhua Airlines (XIH), Changan Airlines (CGN), and Shanxi Airlines (CHG), received its operating license from (CAAC) (CAC), the Centre for Asia Pacific Aviation (CAPA) said. The way now is paved for Grand China Air (GCH) to complete a listing in Hong Kong, possibly as early as the second half of this year. (CAPA) Executive Chairman, Peter Harbison said the listing could raise up to $500 million. Hainan (HNA), once a leisure-only carrier, now derives 16% of its capacity from Beijing, and only 9% from Haikou, the capital of Hainan Province. It plans to add two 737-800s, three A319s and two A330s to its fleet of 101 airplanes this year. (HNA) Group's expansion plans also include its new regional, Grand Xinhua Express (GXE).
June 2007: Hainan Airlines (HNA) Group subsidiary Lucky Air (LKY) will launch "West China Airlines," Hainan Airlines (HNA)'s new Low Cost Carrier (LCC), by June 18 in Chongqing, with three 737-300s transferred from the parent company (HNA). The new carrier is expected to receive its operating license from the (CAAC) (CAC) soon. It will join (HNA)'s other western venture, "Western Airlines (CHO)," which it has been working on since December 2005 with the Chongqing Real Estate Group. That carrier has yet to be approved by (CAAC) (CAC). (HNA) Group is the parent of Hainan Airlines (HNA). Lucky Air (LKY) and Jianying Investment Co each hold a 35% stake in the new "West China Airlines," with identical investments of CNY28 million/$3.7 million, while Sichuan Three Star General Aviation Co, Shenzhen Guorui Investment Co, and Xinjiang Siweida Technology Co each contributed CNY8 million for the remaining stakes.
With the skies over eastern China nearing saturation, several airlines are adopting a "Go West" strategy. (HNA)'s Western Airlines (CHO) originally was slated to be called "Chongqing Airlines," but China Southern Airlines (GUN) had designs on its own western carrier and the same name - Chongqing Airlines (CGQ). (HNA) had to rebrand to "Western Airlines (CHO)," because (GUN) recently received (CAAC) (CAC) approval for its new subsidiary Chongqing Airlines (CGQ), which also is scheduled to launch next month. Meanwhile, Shenzhen Airlines (SHZ) plans to base its regional joint venture with Mesa Air Group, "Kunpeng Airlines," in Xi'an at year end.
(CAAC) granted a public air transport enterprise operating license to the (HNA) Group for its "Grand China Air" (GCH) entity, bringing the Hainan Airlines (HNA) parent one step closer to launching its new carrier, which will combine Hainan (HNA) along with Xinhua Airlines (XIH), Changan Airlines (CGN), and Shanxi Airlines (CHG), and be the country's fourth-largest commercial carrier. (HNA) Group President, Chen Feng called the license "an important milestone." It follows the April award of Grand China Airline (GCH)'s general aviation business license. Chen said "Grand China Air" (GCH) now will work toward merging the four carriers, raising CNY5 billion/$654.9 million in capital, and listing the new company on the Hong Kong Stock Exchange, possibly by year end. (HNA) currently holds 60% of Xinhua (XIH), 93.75% of Shanxi (CHG), and 81.16% of Changan (CGN). An internal source said that "Grand China Air" (GCH) Holding will purchase the remaining outstanding shares of the three airlines "very soon."
(GCH), to be based in Beijing, has registered capital of CNY3.09 billion. State-owned, Hainan Development Holding holds 48.6%, with a CNY1.5 billion investment, while (HNA) Group and Starstep Ltd hold 19.1% and 18.6%, respectively. Minority shareholders are Yangtze River Investment Holding (8.1%), and Hainan Qixing Investment (5.3%). Industry analysts have pointed out that (HNA)'s asset liability rate, which has been as high as 94.3%, would mitigate its ability to raise funds for fleet expansion. Launching Grand China Air (GCH) and listing in Hong Kong will allow it to attract more strategic investors, while evading certain financial risks.
(HNA) currently holds 9% of the domestic air transport market, that is dominated by Air China (BEJ), China Southern Airlines (GUN), and China Eastern Airlines (CEA).
August 2007: Beginning June 8, Hainan (HNA) will operate passenger flights between Beijing and Seattle. Hainan (HNA) never before has applied to serve the USA. It also has applied to serve Mexico City from Beijing (PEK) from March 30, and last month, it started flights to St Petersburg. The local analyst community has suggested that the carrier is expanding internationally to pave the way for the launch of Grand China Air (GCH).
737-84P (35749, B-5338), Hainan Airlines (HNA) wet-leased.
September 2007: Hainan Airlines (HNA) posted a +CNY189.71 million/+ $25.18 million net profit in the first half of 2007, a better-than-eightfold increase over +CNY20.8 million earned in the year-ago period, on a +13.1% lift in operating revenues to CNY6.53 billion. (HNA) credited the strong performance to improvements in operating efficiency and "reinforcement of its branding value," while industry analysts also cited "bullish domestic market demands" and appreciation of the yuan. Operating expenses rose +16.14% to CNY5.36 billion. Passenger boardings jumped +21.2% to 7.47 million while cargo traffic grew +15.45% to 1.14 billion (FTK)s.
Concurrent with the earnings announcement, the company said that "Grand China Air" (GCH) Holding has decided to purchase 31.7% of (HNA) subsidiary, Lucky Air (LKY) from another subsidiary, Shanxi Airlines (CHG). This is in line with (HNA)'s plan for the launch of its "Grand China Air" (GCH) entity.
Earlier this year, (HNA) Group Chairman, Cheng Feng noted that its "Grand China Air" (GCH) entity will merge its subsidiaries including Hainan Airlines (HNA), Xinhua Airlines (XIH), Changan Airlines (CGN) and Shanxi Airlines (CHG) to become the country's fourth-largest commercial carrier. (HNA) currently holds 60% of Xinhua (XIH), 93.75% of Shanxi (CHG), and 81.16% of Changan (CGN). An internal source said that "Grand China Air" (GCH) Holding will purchase the remaining outstanding shares of the carriers "very soon."
November 2007: (HNA) Group's "Grand China Air (GCH)," designed to be the country's fourth-largest commercial carrier, launched on November 29 in Haikou, capital of Hainan Province, according to (HNA) Chairman, Chen Feng. Hainan Development Holding Co holds 40.65% of (GCH) with an investment of CNY1.5 billion, while (HNA)'s Hainan Airlines (HNA) invested CNY900 million in a 24.08% stake. Other investors include Starstep, Yangtze River Investment, Pan American Aviation Holdings, Qiye Industrial Investment, Union Trans-Atlantic, and Perfect Star Investment. To pave the way for (GCH)'s launch, Chen resigned as Hainan Airlines (HNA) Chairman on November 1. (GCH) will be the controlling stakeholder in Hainan (HNA) and under Chinese regulations, the Chairman of a company that is the controlling stakeholder of a listed company cannot also Chair the listed company.
(GCH) will to merge Xinhua Airlines (XIH), Changan Airlines (CGN), and Shanxi Airlines (CHG) into one entity. (HNA) currently holds 60% of Xinhua (XIH), 93.75% of Shanxi (CHG), and 81.16% of Changan (CGN). (GCH) will aim to purchase the remaining outstanding shares of those carriers "very soon." Chen also noted that the new entity plans to be listed on the Hong Kong stock exchange. "Hainan Airlines (HNA) aims to solve its high debt ratio, by reorganizing to launch Grand China Air (GCH) and to list in Hong Kong, as the debt ratio would negatively impact raising funds for fleet expansion," he said. (HNA)'s debt ratio was about 80% in the third quarter.
Grand China Air (GCH), created by the (HNA) Group to be the country's fourth-largest commercial carrier, operated its first flight from Beijing to Dalian, although it postponed the ceremony to mark its launch to next month. (GCH) will operate under the (IATA) code of CN. It is noteworthy that it chose to operate out of Beijing, while its headquarters remains in the provincial capital of Haikou. An industry insider said that (GCH) "has no other alternatives," as the Hainan provincial government made its CNY1.5 billion investment contingent on the headquarters remaining in the province. "Meantime, (CAAC) also wouldn't approve its name as "Grand China Air" (GCH) unless it is based in Beijing. (HNA) has the ambition to be a national carrier, so it didn't want to give up the name," the source said. (HNA) said it will merge Hainan Airlines (HNA), Xinhua Airlines (XIH), Changan Airlines (CGN), and Shanxi Airlines (CHG) into one entity "very soon," after which it will list on the Hong Kong Stock Exchange. Even then it will have a long way to go to catch the Big Three of Air China (BEJ), China Southern Airlines (GUN), and China Eastern Airlines (CEA), which hold a combined 80% share of the domestic market while (GCH) grabs just 9%.
737-84P (35747, B-5337), delivery, 737-86N (28576, B-2637, (GECAS) (GEF) leased, and 737-883 (28320, B-5089), delivery.
January 2008: As Shanghai occupies a 70% share of the Chinese cargo market, airlines from home and abroad are increasing their efforts to grab their portion. (DHL) launched its North Asia hub project at Shanghai Pudong in November, and (UPS) established its Asia transfer center at the same airport. Cathay Pacific Airways (CAT) continues to discuss a cargo joint venture with Air China (BEJ), while (HNA) Group plans to establish its Grand China (GCH) Logistics Holding Co in Shanghai.
February 2008: Hainan Airlines (HNA) will increase its 2007 net profit by >200% from the prior year, when it earned +CNY181.6 million/+$25.2 million. It credited the "rising value of [the yuan] and continuous development of [the] aviation industry" for the projected result. Hainan Airlines (HNA) is set to be merged into Grand China Air (GCH). (HNA) also said it has secured a CNY20 billion line of credit with Agricultural Bank of China as well as a CNY1.8 billion loan for lease payments on 10 ERJs.
April 2008: 737084P (30475, B-2652), delivery.
June 2008: Hainan Airlines (HNA) is joining with the Yunnan local government in SW China to launch Yunnan Airlines (YUX), which will be comprised mainly of the assets of Lucky Air (LKY), an (HNA) subsidiary launched in 2006, that apparently will cease to exist. Based on an agreement signed between (HNA) and the Yunnan government, another (HNA) subsidiary, Grand China Air (GCH), will be the controlling stakeholder of the new Yunnan Airlines (YUX). The entity is reported to have a registered capital of >CNY3 billion/$43.3 million.
According to (HNA) Chairman, Chen Feng, Lucky Air (LKY)'s 6 737-700s will be operated by the new airline, which will aim to expand to a fleet of >30 airplanes within 3 years. He added that (LKY) is interested in acquiring A330s and 767s to operate international routes to SE Asia countries. Industry analysts pointed out that it will challenge China Eastern Airlines (CEA)'S current dominant position in Yunnan.
August 2008: 737-84P (35756, B-5403), Hainan Airlines (HNA) leased.
October 2008: Grand China Air (GCH) is a joint venture between the Hunan Provincial Government, (HNA) Group, and the Soros Fund. (GCH) provides a domestic service from mainland China to the island of Hainan.
(IATA) Code: CN - 895. (ICAO) Code: GDC (Callsign - GRAND CHINA).
February 2009: A319-132 (3849), Hainan (HNA) wet-leased, ex-(D-AVYV).
June 2009: Hainan Airlines (HNA) subsidiary Lucky Air (LKY) received a CNY290 million/$42.4 million capital injection from the Yunnan provincial government. (LKY) now has registered capital of CNY906 million, with (HNA) subsidiary Grand China Airlines (GCH) the controlling stakeholder at 68%. Yunnan will hold the remainder. The parties reached an agreement last June to launch a new carrier (Yunnan Airlines) based on (LKY)'s assets. A Yunnan official said that the Lucky (LKY) name will be maintained for the time being. (LKY) held an 18% market share as of March, 2nd to China Eastern Airlines (CEA)'s Yunnan branch (45%). (CEA) and the government announced their own joint venture. (LKY) currently operates 10 airplanes on 448 weekly flights across 24 routes. (LKY) plans to expand to 30 airplanes over the next 3 years. This marks the 3rd time (HNA) has received financial support from the government. Hainan Province injected CNY1.5 billion, while the Tianjin government put CNY200 million into Grand China Air (GCH).
0 737-84N (CFM56-7B26) (35639, B-5417; 36541, B-5418), (GEF) LEASED. 8C, 156Y.
1 737-84P (CFM56-7B26) (731-30475, /00 B-2652), 8F, 156Y.
3 +2 ORDERS 737-84P (CFM56-7B26) (34031, B-5416; 2433-35747, B-5337, 2007-11; 2330-35749, B-5338, 2007-08; 2691-35756, B-5403, 2008-08; 35764, B-5408), WITH WINGLETS, (HNA) WET-LEASED. 8F, 156Y.
0 737-86N (CFM56-7B26) (103-28576, /98 B-2637), (GEF) LEASED 2007-11. 8F, 162Y.
1 737-883 (CFM56-7B26) (551-28320, /00 B-5089), 8F, 162Y.
1 A319-132 (3849, B-6193), (HNA) WET-LEASED 2009-02. EX-(D-AVYV).
CHEN FENG, CHAIRMAN (HNA) GROUP.
LI XIAOMING, CHAIRMAN (HNA) (2008-09) & ALSO GREAT CHINA AIR (GCH).