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7JetSet7 Code: HNA
Status: Operational
Region: CHINA
Country: CHINA
Employees 10027
Web: hnair.com
Email: hhfwxx@hnair.com
Telephone: +86 898 6575 6727
Fax: +86 898 6673 6273

Click below for data links:
HNA-2012-08 787 ROUTE
HNA-2012-12 - ABU DHABI 767
HNA-2013-05 - NEW 787 FOR HAINAN
HNA-2013-07 - 1ST 787
HNA-2014-07-737 MAX 8
HNA-2014-08 TOP 12 ROUTES
HNA-2014-09 - TO PARIS
HNA-2015-06 - 787 Shanghai - Boston.jpg
HNA-2015-06 - Seattle to Shanghai.jpg
HNA-2015-12 - Xi an to Sydney.jpg
HNA-2016-03 - Air Guilin A319.jpg
HNA-2016-06 - Beijing to Manchester-A.jpg
HNA-2016-06 - Beijing to Manchester.jpg
HNA-2017-03 - 787-9 - LAX to Chengdu.jpg
HNA-2017-12 Shenzhen to Cairns.jpg
HNA-Cabin Attendants - 2015-10.jpg
HNA-Cabin Attendants Global - 2016-03.jpg



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.




APRIL 1993: 2 737-33A'S (PS611; PS613), (AWW) LEASED.


DECEMBER 1993: 2 737-3Q8'S (PQ473; PQ474), (ILF) LEASED.


JANUARY 1995: 1994 = +$10.3 MILLION (+$8.1 MILLION) (NET PROFIT): +222.8% (RPK) TRAFFIC, +268.9% PASSENGER (PAX), +346.2% (FTK) FREIGHT TRAFFIC.








MARCH 1996: 1 737-400 DELIVERY.




AUGUST 1996: 1 LEARJET 60 FOR CHARTER SERVICES. 1 737-400 (CFM56-3C1) (26337), (ILF) 7 YEAR LEASED.









JULY 1997: 2 SA227-DC METRO 23'S (DC-8658B, DC-8682B).











737-400 (25766), EX-ASIANA (AAR), SUNROCK (SNR) LEASED. +2 ORDERS (AUGUST 1998) 737-400'S. 1 ORDER (AUGUST 1999) 737-800. 2 ORDERS (AUGUST 1998) 737-86N'S (28574; 28576), (GEH) 7 YEAR LEASED.


JULY 1998: 2 ORDERS (FEBRUARY 1999) 737-800'S (28O65; 28220), (ILF) LEASED.


1ST 737-86N (28574), (GECAS) (GEH) LEASED (1ST IN CHINA).

SEPTEMBER 1998: 737-44P (29914) AND 737-86N (28576) DELIVERIES.



1 737-700 (29086).



1998 = +$15.1 MILLION. PROJECTS 1999 = +$17.5 MILLION.

737-8Q8 (212-28220, B2638) & BEECHJET 400A (B-3989) DELIVERIES.






2,112 EMPLOYEES. (http://www.hnair.com).



MAY 1999: 737-8Q8 (CFM56-7B) (28056, B-2646), (ILF) LEASED.









MARCH 2000: 3 DORNIER 328-300'S (PW306B) (3135, B-3966; 3138, B-3963) DELIVERIES.



DORNIER 328-300 (3140, B-3965) DELIVERY.



1 DORNIER 328-300 (3144, B-3967) DELIVERY.

JULY 2000: 1999 = +$15.6 MILLION.



6TH 737-84P (30474, B-2651) DELIVERY (CFM56-7B26). 1 DORNIER 328-300 (3148, B-3968) DELIVERY.




DORNIER 328-300 (3153, B-3969; 3148, B-3968) DELIVERIES.

SEPTEMBER 2000: 3 DORNIER 328-300 (3154, B-3970; 3158, B-3973; 3159, B-3155) DELIVERIES.

OCTOBER 2000: + 5/5 ORDERS 737-800'S, WITH WINGLETS.

NOVEMBER 2000: 2 DHC-8-402'S (4005, B-3568; 4006) DELIVERIES.



JANUARY 2001: 1 DORNIER 328-300 (3172, B-3971) DELIVERY.


20 ORDERS 717-200'S.





MAY 2001: 1 BOMBARDIER DASH 8-402 (4039) DELIVERY. 737-44P (B-2576, PINK & RED LILIES). 737-84P (B-2652, BLACK & BROWN BIRDS IN A CORNFIELD). 1 DORNIER 328-300 (3182, B-3977) DELIVERY.







1 DASH 8-402 (4039, B-3569) DELIVERY.










MARCH 2002: 2001 = +$12.1 MILLION (-39%).

IN 2002, TO ADD 6 737-800'S, 3 767'S AND 12 DORNIER 328'S. 1 737-8Q8 (273-28056, /99 09 05 B-2646), (ILF) LEASED.




June 2002: 737-86Q (1147-32885, B-2675) delivery.

July 2002: Haikou to Dalian.

August 2002: 2001 = +$19.76 million: 4.43B (RPK) traffic (+10.9%); 71.2% LF load factor; 3.73 million passengers (PAX) (+1.9%); 71.48 million (FTK) freight traffic (+5.3%); 2,991 employees (+75.9%).

737-84P (32604, B-2677) delivery. 1 Cessna 208 Grand Caravan (00354, B-3639) delivery.

September 2002: Scraps plans to set up a joint-venture "Air Cambodia"
with the Cambodian government, when it was found that international operating rights were also given to Mekong Airlines (A320's and ATR42's) and President Airlines, reducing the international capacity opportunities.

October 2002: Haikou to Xi'an to Urumqi (737-800, 3x-weekly).

2 767-34PER's (33047, B-2490) deliveries, to be operated by Xinhua Airlines (XIH), will typically remain overnight in Beijing. Hainan Airlines (HNA) will provide Engineering support out of Haikou. Also, "A" and "C" checks are to be performed in Haikou by (HNA).

The 767-300ER's will be deployed initially on domestic trunk routes, (to Haikou, Shanghai, and Urumqi) and regionally to Singapore and Seoul. May fly transpacific routes in 2003.

4 737-330QC's, ex-Lufthansa (DLH) to take advantage of the anticipated boom in demand for domestic cargo shipments. Will wet-lease these airplanes to (HNA) subsidiary, Yangtze River Express Airlines (YTH).

December 2002: Zhao Zhong Yin, Executive President, replaces Li Wei Jian. Zhu Yi Ming, (CEO).

Guangzhou to Xi'an (737, daily). Xi'an to Shanghai (737, daily).

2 767-34PER's (33048, B-2491) deliveries. 5 orders 737-700's leased.

January 2003: 1 737-330QC (1677-24283, B-5055), ex-Lufthansa (DLH) Automatic, Florida 5 year leased. Will be wet-leased to Yangtze River Air Express (YTH), which handles the cargo businesses of Hainan Airlines (HNA), Xinhua Airlines (XIH), Chang An Airlines (CGN) and Shan Xi Airlines (CHG). (YTH) will carry (UPS) cargo from Beijing, Guangzhou, Qingdao, and Xiamen to the (UPS) hub in Shanghai.

767-34PER (893-33049, B-2492) delivery.

February 2003: Last 6 months 2002 = +56.81 million Yuan/+$6.81 Million (+50%).

March 2003: 3 737-76N's (28582, B-5060; 28583, B-5061; 28585, B-5062), (GECAS) (GEF) leased.

April 2003: 3,054 employees (including 610 Flight Crew (FC), 536 Cabin Attendants (CA), & 479 Maintenance Technicians (MT)).


June 2003: Starts 1st 737-300 "6C" maintenance check.

July 2003: 737-330QC (23836), ex-Lufthansa (DLH), Automatic 5 year leased.

August 2003: 8 Fairchild Dornier 328JETs (3198; 3203; 3204; 3208; 3211; 3215; 3217; & 3218), ex-AvCraft Aircraft.

September 2003: 2002 = +$21.9 Million (+$12.1 million): 7.93 billion (RPK) traffic (+5.4%); 66.6% LF load factor; 6.3 million passengers (PAX); 129 million (FTK) freight traffic (+82.5%); 6,113 employees (+100.2%).

77 (ARL) 8.69; 78 (PRH) 8.67; 79 (XIN) 8.61; 80 (TAV) 8.32; 81 (IRN) 8.01; 82 (HNA) 7.93; 83 (IND) 7.55; 84 (OLY) 7.55; 85 (ACH) 7.50; 86 (SBR) 7.48; 87 (MTH) 7.09; 88 (KUW) 6.71; 89 (VIE) 6.60; 90 (SPR) 6.57; 91 (BMA) 6.56; 92 (LNK) 6.41; 93 (RAM) 6.38; 94 (BTA) 6.36; 95 (QTA) 6.20; 96 (COI) 5.96; 97 (EGF) 5.94; 98 (LOT) 5.87; 99 (FRO) 5.49; 100 (WJI) 5.49.

In November 2003, agreement with Japan Airlines (JAL) Group on connecting flights Beijing - Chengdu & - Xi'an (daily) for (JAL) passengers flying to and from these cities from Tokyo, Osaka and Nagoya via the Chinese capital.

October 2003: 3 Dornier 328-310's (3198, B-3949; 3204, B-3948; 3208, B-3946) deliveries.

November 2003: $2.4 billion, 30 orders 737 (CFM56) to be distributed to: Air China (BEJ) (5 737-700's), Xiamen Airlines (XIA) (5 737-700's), Hainan Airlines (HNA) (8 737-800's), Shandong (SHG) (7: 3 737-700's & 4 737-800's), and Shenzhen Airlines (SHZ) (5 737-900's).

737-330QC (23835) Automatic leased, wet-leased to Yangtse River Express (YTH). 1 Dornier 328-310 (3211, B-3983) delivery.

December 2003: Dornier 328-310 (3203, B-3947) delivery.

January 2004: 737-883 (28319), bought from Scandinavian Airlines (SAS).

February 2004: Hainan Airlines (HNA) plans to consolidate with China Xinhua (XIH), Shan Xi Aviation (CHG), and Chang An Airlines (CGN) into one firm based in Beijing and operating under the name "Grand China Air" (CGH).

Contract with (AMECO) (BEJ) for 6 737-300's "D" check heavy maintenance through September 2004.

4 737-883's (28319; 551-28320, B-5089; 28321) bought from Scandinavian Airlines (SAS).

March 2004: 3 Dornier 328-310 (3215, B-3985; 3217, B-3986; 3218, B-3987), deliveries.

April 2004: In August 2004, code share with Malev (HGA), Budapest - Beijing.

$24 Million contract with Pemco Aviation Group to convert 2/8 737-300's (24362; 24378) from passengers to freighters.

2 737-322's (24362; 24378), bought from United Airlines (UAL).

May 2004: +15/5 orders Dornier 328 Jets.

June 2004: Malev (HGA)'s privatization may get a boost from an unlikely source: Hainan Airlines (HNA), possibly in partnership with billionaire financier George Soros, who is a shareholder of (HNA). Laszlo Sandor, President & (CEO) and Chen Feng, Hainan (HNA) Group signed an extended cooperation agreement. In July 2004, a (HNA) 767-300ER will operate in cooperation with (HGA), Hungary - China (3/week).

(HGA) received a recent # EUR 27.7 Million/$33.7M recapitalization by the government, which has cleared the way for investment in the airline. (HGA) is working to become an associate member in the SkyTeam Alliance by November 2004.

The USA and China have signed a landmark air services agreement that will more than double the number of USA airlines that may serve China and will permit a nearly 5-fold increase in weekly flights between the 2 countries over the next 6 years.

The agreement allows for +5 airlines from each country, the USA may name +1 additional all-cargo carrier, while China may name either a passenger or cargo carrier, to start service later in 2004. The other 4 new-entrant airlines may be either passenger or cargo carriers, with 1 new carrier entering the market in each of the years 2005, 2006, 2008, & 2010. United Airlines (UAL), Northwest Airlines (NWA), FedEx (FED), & United Parcel Service (UPS) currently serve China.

The agreement allows +195 weekly flights for each side, +111 by all-cargo carriers, & +84 by passenger airlines, resulting in a total of +249 weekly flights at the end of a 6-year phase-in period. A total of +14 of these flights will be available for new passenger services later this 2004.

Each country's carriers are now allowed to serve any city in the other country. Currently, Chinese carriers are limited to 12 USA cities, and USA passenger carriers may fly to only 5 Chinese cities. The agreement allows unlimited code-sharing between USA and Chinese carriers, thus expanding the current agreement which only allows code-sharing only to a limited number of cities.

The agreement also provides that when carriers establish cargo hubs in the other country, they will be afforded a high degree of operating flexibility, and expands charter opportunities beyond those provided by the existing agreement.

Trade between the countries has grown dramatically from $4.8 Billion in 1980 to >$170 Billion in 2003. The USA is China's largest export destination, and China is the USA's fastest-growing market.

7 orders 737-300/-400/-700's, 5 orders 737-800's, 3 orders 767-300ER's, 5 orders A319's & 6 Dornier 328JETs in 2004.

July 2004: 2 767-3BGER's (30563, B-2561; 30566, B-2562), ex-Sobelair (SBL), Deutsche Structured Finance leased.

August 2004: Chinese partner Hainan Airlines (HNA) may be interested in placing a bid when the state-owned Hungarian carrier Malev (HGA) is privatized later this year.

Haikou - Beijing - Budapest (3/week).

Receives OK to fly to the USA in 2005. Is expected to order 777-200's to operate the USA flights. In September 2004, launches its 1st international service to Osaka (KIX).

Hainan Airlines (HNA) group affiliate, Shan Xi Airlines (CHG) is forming Shilin Airlines, Yunnan, owned by (CHG) (51%); Hainan (HNA) (48.9%), & Yunnan Shilin Tourism Aviation (0.1%), to operate 1 737, 1 Bombardier Dash 8, & 3 Dornier 328JETS.

September 2004: Malev (HGA) will be privatized this fall, with bids due by October 2004, but finding an investor may be difficult. Potential bidders include Hainan Airlines (HNA) (interested in acquiring 100%), in which Hungarian-born billionaire George Soros holds a key investment, Austrian Airlines (AUL); and the Air France (AFA)/(KLM) consortium.

Receives OK to fly to the USA in 2005.

737-36Q (2914-28662, B-2608), Boullioun (BOU) leased for subsidiary, Deer Jet Corp operations.

October 2004: Code share with Japan Airlines Domestic (JAS), Haikou - Osaka (KIX).

November 2004: 8 orders (June 2005) A319's.

737-705 (29091, B-5091), Babcock (BBB) leased.

January 2005: (CAAC) (CAC), $7.2 Billion, 60 orders (February 2008) 787-8's, 223 pax: 13 787-8's to China Southern (GUN), including 3 787's for Xiamen Airlines (XIA); 15 787-8's to China Eastern Airlines (CEA); 8 787-8's to Hainan Airlines (HNA); 20 787-8's to go to Air China (BEJ); and 4 787-8's Shanghai Airlines (SHA).

February 2005: Selected Sabre Airline Solutions AirFlite Suite including Schedule Manager, Profit Manager, Fleet Manager, & Slot Manager.

Selected Rockwell Collins avionics for 6 737NG's, and 8/12 A319's/A321's.

737-8FH (B-5115) delivery.

May 2005: 8,400 employees.

July 2005: 737-8FH (1745-29672, B-5116), RBS Aerospace leased.

August 2005: 8,700 employees (+8.8%).

737-84P (32603, B-5135), delivery, wet-leased to Shan Xi (CHG).

September 2005: China Airlines (CHI) joined with Cargolux (CLX) to take a 49% stake in Shanghai-based Yangtze River Express (YTH). The cargo carrier (YTH) operates four 737-300QCs and transports cargo within China for (UPS). According to a statement to the Taiwan Stock Exchange, China Airlines (CHI) will pay 312.5 million yuan/$38.6 million for its 25% stake. Hainan Airlines (HNA) has a 15% holding.

Hainan Airlines (HNA) took its first two (CFM56)-powered A319-115's (2557, B-6210; 2561, B-6211). The airplanes are configured for 134 passengers in single-class layout. They will be operated by Chang'an Airlines (CGN), a local branch of Hainan Airlines (HNA) in Xi'an. 2 Dornier 328-300's (3198; 3208), deliveries.

October 2005: Japan Airlines (JAL) on October 30, will begin codesharing with China Eastern Airlines (CEA) on three domestic routes: Shanghai - Chengdu, Shanghai - Chongqing, and Shanghai - Shenzhen, a total of 42 weekly flights. (JAL) already codeshares with Hainan Airlines (HNA) on seven weekly flights between Beijing and Chengdu. It also operates JAL China Express with Hainan Airlines (HNA) from Beijing to three Chinese cities and on six routes from Beijing in cooperation with China Southern Airlines (GUN).

Global financier, George Soros agrees to invest +$25 Million more in Hainan Airlines (HNA), doubling his investment (he had made a $25 Million investment in (HNA) in 1995 to buy 14.8% of (HNA). The funds will go to Grand China Air, 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), Chang An (CGN) and Shan Xi (CHG) - - to form Grand China Air. 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.

Hainan Airlines Company Ltd assumed control of Anhui Province's loss-making Anqing Airport earlier this week as the carrier seeks further expansion in the eastern China market, company officials said.

The move follows USA financier, George Soros' $25 million investment into Hainan Airlines (HNA) that aimed at forming a new airline by merging three smaller carriers. Hainan Airlines (HNA) hopes the forming of the new carrier, "Grand China Air," 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

(HNA), the country's fourth biggest carrier, signed an agreement with Anqing municipal government to take over the airport, which has been suffering from a passenger shortage and huge debt. The carrier will restructure and operate the airport which it wholly controls and won't be responsible for the old debts. Instead of a cash investment, the carrier will get preferential policies from Anqing City on aviation-related industries such as hotel operation, tourist resources development, retail and the opening of new routes.
(HNA) plans to offer Anqing to Shanghai and Anqing to Guangzhou routes after the takeover. Anqing Airport has a annual passenger throughput of more than 20,000 and has been running in the red for many years. China's Civil Aviation Administration issued regulations last month calling for more investment to help bail out the country's many small and mostly loss-making airports. Anqing Airport is the ninth airport owned by (HNA), the only domestic carrier investing in airports. "Hainan (HNA) is interested in investing in airports with development potential," said an unidentified company official. The carrier owns 18 star-rated hotels in cities that include Beijing, Shanghai, Guangzhou and Sanya. In 2003, it entered the retail sector by restructuring Xi'an Minsheng Company Ltd. It also bought a 51 percent stake in Tianshan Tianchi, a tourist resort in Xinjiang Uygur Autonomous Region.

(HNA) announced its profit is expected to drop by more than -50 percent in the first three quarters.

FL Group (ICE) and Kaupthing Bank signed a letter of intent (LOI) to form a company to manage 10/5 737-800s ordered by FL Group (ICE) earlier this year. FL Group (ICE) will hold 49% of the leasing venture. Lease agreements have been placed for nine of the airplanes, five of which will go to Air China (BEJ) as previously announced. Hainan Airlines (HNA) will lease another four for eight years with deliveries in August - December 2006.

China signed a deal for 70 Boeing 737-700/800s for delivery between 2006 and 2008. The airplanes are destined for: Air China (BEJ), China Southern Airlines (GUN), China Eastern Airlines (CEA), Shanghai Airlines (SHA), Xiamen Airlines (XIA), Shandong Airlines (SHG), Hainan Airlines (HNA) & Shenzhen Airlines (SHZ).

3 737-84P (32605, B-5136; 32606, B-5137; 34030, B-5141), deliveries.
2 A319-115's (2581, B-6212; 2617, B-6198), to Chang An (CGN).

December 2005: Airbus (EDS)'s negotiations with Chinese authorities resulted in a blockbuster contract as the airframer reached a "general terms agreement" with Chinese Aviation Supplies Import and Export Group for the purchase of 150 A320 family airplanes.

The order comprises A319s, A320s and A321s – the largest single order Airbus (EDS) has ever received since it entered the Chinese market 20 years ago. The deal is worth nearly $10 billion and was signed in the presence of Prime Minister Dominique de Villepin and Premier Wen Jiabao during the latter's visit to France. "Since it was first introduced into the Chinese market in 1995, the A320 family airplanes have been put in service by 10 Chinese operators with a total of 216 airplanes, accounting for two-thirds of all in-service Airbus (EDS) airplanes, or nearly one-quarter of the total airplanes in operation in China,” said (CSC) President Li Hai. “The demand for this modern and cost-saving airplane family from Chinese airlines has been rapidly increasing in recent years."

The 150 airplanes will be delivered to six Chinese airlines, including Air China (BEJ), China Eastern Airlines (CEA), China Southern Airlines (GUN), Sichuan Airlines (SIC), Shenzhen Airlines (SHZ), and Hainan Airlines (HNA).

The agreement followed by one day the signing of a Memo of Understanding (MOU) between Airbus (EDS) and the National Development & Reform Commission of China covering Chinese participation in Airbus programs including the possibility of establishing a final assembly line "for single-aisle airplanes in China."

Five Chinese companies currently produce parts for Airbus (EDS), which has committed to increase procurement volume to $60 million by 2007 and $120 million by 2010. It employs 54 Chinese engineers (MT), soon to be 200, at its Beijing engineering center, which will be part of China's promised participation in the A350 program. Airbus and China Aviation Industry Corporation signed a $500 million extension last month to a contract for A320 family wing boxes.

China and Singapore agreed to an expanded air services deal lifting restrictions on routes, capacity and airplane type on flights between the countries. The contract was signed in Beijing, according to media reports.

Last week, CR Airways (CRY) was a little-known Hong Kong-based regional airline flying a trio of CRJs to destinations in China and the Philippines, but it is on the map now, thanks to a multibillion-dollar ($3B) Memo of Understanding (MOU) with Boeing (TBC) covering orders for 30 737-800s and 10 787's. The order is expected to be finalized next year, but in the meantime Hainan Airlines (HNA) has confirmed that it is in talks to acquire 60% of the tiny carrier. According to "AFX News" in Beijing, which cited a report in the Wall Street Journal, Hainan (HNA) may already have completed the acquisition. Financier George Soros holds a 15% stake in Hainan (HNA).

737-84P (32607, B-5138), delivery. A319-115 (2644, B-6199), delivery.

January 2006: Hainan Airlines (HNA) is planning to operate its first USA route by offering service from China to Boston. The airline is looking to start cargo service this summer followed by passenger service by the end of the year.

Taiwan's China Airlines (CHI) acquired a 25% stake in China's Yangtze River Express Airlines (YTH). (CHI) Chairman Philip Wei attended a share transfer ceremony in Beijing finalizing the company's acquisition of shares in Yangtze River (YTH). The deal was valued at $38.7 million, according to media reports. Total share transfer among four investors was for 49%. Other partners include Yang Ming Marine Transport Corporation, which holds a 12% stake; Wan Hai Lines with 6%, and China Container Express Lines with 6%.

Established near Shanghai Hongqiao in 2002, Yangtze River Express (YTH) provides regional and domestic air cargo services originating from Shanghai with six 737-300Fs. It flies to Korea, the Philippines, Thailand, Bangladesh, and Singapore, and has secured traffic rights to Los Angeles and Frankfurt. It will introduce two 747 freighters this year. It is a subsidiary of (HNA) Group, which also owns Hainan Airlines (HNA) among other carriers.

China Airlines (CHI) appointed Yung-hsiang Liu, currently VP Europe, to be the new (CEO) of Yangtze River Express (YTH). The investment is part of (CHI)'s strategy of establishing air cargo operations in mainland China.

737-84P (32608, B-5139), delivery.

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.

Chongqing Airlines (CHO) has been set up by local government-owned Chongqing Land Properties Group and will be managed, subject to (CAAC) (CAC) approval, by Hainan Airlines (HNA).

Chinese domestic airlines flew a record 138 million passengers in 2005, a rise of +15% over 2004 and double the number of 2000. The figure is expected to double again in the next five years, according to Gao Geng, the Vice Minister of the General Administration of Civil Aviation in China. Cargo and airmail throughput rose +14% to 3.04 million tons in 2005 and also is expected to double in the next five years. However, profit margins will remain tight within the sector. He noted revenues in the sector had grown to CNY170 billion/$21.09 billion at the end of 2005, but profits in the past five years had amounted to only +CNY10 billion.

March 2006: Hainan Airlines (HNA) is expected to pick a destination in Europe for service from Beijing. The airline is currently considering Brussels and Zurich and should make a decision soon.

April 2006: Hainan Airlines (HNA) will shortly confirm a new European route. The airline is planning to start service from Shanghai to Brussels via Beijing. Start is expected in late June or early July and Hainan (HNA) would begin with 4 flights a week, on Tuesdays, Thursdays, Saturdays, & Sundays, using a 767-300ER.

Hainan Airlines (HNA) confirmed that it intends to offer four weekly 767-300 services from Shanghai and Beijing to Brussels from the end of July in cooperation with SN Brussels Airlines (DAT). Brussels will be the Chinese carrier's first international destination, yet Hainan Airlines (HNA) Group VP, Zhao Zhongyin admitted the launch needs some fine-tuning. "Frankly speaking, there are still problems ahead before we start the new operation. We will strive to overcome them and start to serve our passengers with safety, punctuality and excellent cabin services," he said at the signing ceremony in Brussels.

Japan Airlines International (JAL) and Hainan Airlines (HNA) will expand their codeshare agreement to include Hainan (HNA)'s daily flights from Beijing to Kunming and Xian.

Hainan Airlines confirmed that it intends to offer four weekly 767-300 services from Shanghai and Beijing to Brussels from the end of July in cooperation with SN Brussels Airlines. Brussels will be the Chinese carrier's first international destination, yet Hainan Airlines (HNA) Group VP, Zhao Zhongyin admitted the launch needs some fine-tuning. "Frankly speaking, there are still problems ahead before we start the new operation. We will strive to overcome them and start to serve our passengers with safety, punctuality and excellent cabin services," he said at the signing ceremony in Brussels earlier this week.

The (CAAC) (CAC) and the National Development and Reform Commission announced an increase in fuel surcharges on domestic routes of less than <800 km to CNY30/$3.74 from CNY20 and on routes greater than >800 km to CNY60 from CNY40. Increases went into effect April 10 and will last until October 10.

Boeing (TBC) is expected to sign contracts shortly with Chinese airlines for 80 737s. The deal is the second part of an order announced late last year for 70 737s. Hainan Airlines (HNA) will take 15, China Southern Airlines (GUN) 10, Xiaman Airlines (XIA) five, and Shandong Airlines (SHG) six, with the balance taken by Air China (BEJ), China Eastern Airlines (CEA), Shanghai Airlines (SHA), and Shenzhen Airlines (SHZ). Airbus secured a similar commitment for 150 A320s last year but apparently signed a contract with CAAC (CAC), listing the orders as part of the year's record-breaking sales.

737-84P (34029, B-5153), & 2 A319-115's (2733, B-6222; 2746, B-6221), deliveries.

May 2006: Hainan Airlines (HNA) reported a -11.7% decline in first-quarter profits to +CNY12.1 million/+$1.5 million from +CNY13.7 million earned in the year-ago quarter, according to a company statement cited by Reuters. Its full-year 2005 result was worse as the carrier lost -CNY215.8 million one year after earning a profit of +CNY90.7 million. Hainan (HNA) will change its name to "Grand China Air" following its acquisition of three smaller carriers, and it expects to list its shares in Hong Kong by next year, Reuters reported. It already has raised $420 million in an initial private placement and share sale.

Hainan Airlines (HNA) inaugurated nonstop service from Xi'an to Lhasa (Tibet). The airline now operates 4 flights a week, on Mondays, Wednesdays, Fridays, & Sundays, using an A319.

The Chinese government is expected to invest a further CNY140 billion/$17.43 billion in aviation over the next five years, more than the country spent in the previous 15, according to local media reports. The (CAAC) (CAC) said the spending would be focused on the construction of 42 new airports, in addition to upgrading existing infrastructure.

The (CAAC) (CAC) expects the number of Chinese airports to increase from the current 142, to at least 220 by 2020, as the number of airplanes rises from 863 to 1,580 in 2010 and to about 4,000 in 2020.

Top of the regulator's agenda is to reinforce the status of Beijing Capital, Shanghai Pudong and Guangzhou Baiyun as key international hubs, and to upgrade Chengdu, Kunming, Xi'an, Wuhan and Shenyang airports to the status of major regional hubs. Yunnan Province in the southwest of the country will account for nearly one-seventh of the planned spending, as it adds another five airports by 2010.

The (CAAC) (CAC) expects overall passenger and cargo traffic to grow at an average of +14% annually through 2010, with growth slowing to +11% per year from 2011 to 2020. Last year, domestic airlines carried 138 million passengers, an increase of +15.5% from the previous year. Cargo traffic increased at +13.8% to 3.4 million tons over the same period.

June 2006: Hainan Airlines (HNA) is planning to set up a regional airline in Tianjin to be named "Grand Air Express" and be based at the Tianjin Binhai Airport. The new carrier will operate regional passenger and cargo services leasing at least 5 Dornier 328s from Hainan Airlines (HNA) for its startup. Within 3 to 5 years, the carrier hopes to operate 50 to 100 airplanes and become China's largest regional carrier.

August 2006: Hainan Airlines (HNA) posted a +CNY8.7 million/+$1.1 million profit in the second quarter, a reversal from a -CNY3.4 million loss in the year-ago period, the carrier said in a filing with the Shanghai stock exchange, cited by press reports. Revenues climbed +26% to +CNY2.95 billion. Six-month profits doubled to +CNY20.8 million on a +16% increase in passenger volume and 20% growth in freight. Turnover was up +26% to CNY5.75 billion against a +29% surge in costs to CNY4.61 billion. Hainan also said it netted approximately +CNY5.6 billion from a June share sale in order to finance airplane acquisitions.

Hainan Airlines (HNA) parent (HNA) Group took a 45% stake in Hong Kong Express Airways (HKE) (operates regional jets) following receipt of approval from the Hong Kong Economic Development and Labour Bureau. The expected move will see the balance of the airline remain with the original shareholders. (HKE), formerly Helicopters Hong Kong, was launched in 1997 and provided regular helicopter services between Hong Kong, Macao and the Pearl River Delta region. Last year, it re-launched as Hong Kong Express (HKE) with four Embraer EMB-170s operating to five Chinese mainland cities. The move by HNA (HNA) follows its ongoing negotiations to acquire up to 60% of Hong Kong's CR Airways. Its strategy is to build its presence in Hong Kong and launch more flights into China and internationally. Based in Xian and Ningbo, Hainan Airlines (HNA) flies to Brussels, Bangkok, Kuala Lumpur, Osaka and Budapest.

Hainan Airlines (HNA) parent, (HNA) Group will purchase 50 Embraer E190s and 50 ERJ-145s. The deal is valued at $2.7 billion at list prices and represents a huge step for the Harbin Embraer Airplane Industry joint venture with China Aviation Industry Corp II, which assembles the ERJ-145, and had yet to reach a deal with a mainland carrier, delivering just a dozen airplanes as of May. The 106-seat E190s will be built in Sao Jose dos Campos.

The airplanes are a new type for Hainan (HNA), which currently operates 12 737-300s/-400s, 18 737-800s, five A319s, five 767-300ERs and 25 Dornier 328JETs. The (HNA) Group also counts China Xinhua Airlines (XIH), Chang'an Airlines (CGN), Shangxi Airlines (CHG), Deer Jet Co (DER), and Yangtze River Express (YTH) among its subsidiaries.

737-36N (28602, EI-DRY), delivery & A319-115 (2849, B-6156), (GEF) leased.

September 2006: Aviapartner completed development and implementation of an automated wireless baggage reconciliation system in Brussels (BRU) that allows baggage loaders to scan luggage labels with wireless hand-held devices. It signed a deal to provide cargo handling and catering services for Hainan Airlines (HNA) 767-300ER flights arriving at (BRU).

Hainan Airlines (HNA) ordered 15 additional 737-800s, completing the distribution of the 150-airplane order placed by China Aviation Supplies Import and Export Group (CSC). The 150 737-700s/-800s are worth approximately $10 billion at list prices and will delivered to Air China (BEJ) (25), China Eastern Airlines (CEA) (20), China Southern Airlines (GUN) (30), Shandong Airlines (SHG) (12), Shanghai Airlines (SHA) (13), Shenzhen Airlines (SHZ) (10), Xiamen Airlines (XIA) (15) and Hainan (HNA) (25) between this year and 2010.

Rolls-Royce (RR) will supply engines for the 50 ERJ-145s ordered by Hainan Airlines (HNA) Group. The order, which includes 100 engines and long-term TotalCare services, is valued at $500 million.

Hainan Airlines (HNA)'s order for 50 Embraer EMB-190s and 50 ERJ-145s was approved by China's National Development and Reform Commission. The E190s will be built in Brazil, while the ERJ-145s will be built at Embraer's Chinese JV facility with Hafei Aviation Industry Group.

737-8FH (35089, B-5180), RBS leased, & A319-115 (2891, B-6157), delivery.

October 2006: Based on the island of Hainan, Hainan Airlines (HNA) is a privately owned carrier who operates domestic, jet airplane scheduled services network based on Haikou on the island, and Ningbo on the mainland. It has begun to add international services.

Employees = 8,700.

(IATA) Code: HU - 880. (ICAO) Code: CHH (Callsign - HAINAN).

Parent organization/shareholders: Private shareholders (60%); American Aviation (foreign shareholder of unlisted share) (14.8%); (HNA) Holding Group (7.31%); (HNA) Qixing Industrial Investment (7.28%); China Everbright (4.55%); State Property Administration Bureau of Hainan (2.37%); Bank of Communications, Hainan Branch (0.89%); China International Travel Agency (0.89%); Beijing Fieldtrade (0.59%); Hainan Branch of China Industrial Trust & Investment (0.44%); & China Education Trust Investment (0.41%).

Owns: Chang An Airlines (CGN) (73.51%); China Xinhua Airlines (XIH) (60%); Deer Jet (DER); Lucky Air (LKY); Shilin Airlines (48.9%); Shan Xi Airlines (CHG) (92.51%); & Yangtze River Express (YTH) (15%).

Alliances: Japan Airlines Domestic (JAA); Japan Airlines International (JAL); & Malev (HGA).

Main Base: Haikou International airport (HAK).

Hubs: Xi'An-Xianyang International airport (XIY); & Ningbo airport (NGB).

Domestic, Scheduled Destinations: Baotou; Beijing; Changchun; Changsha; Changde; Changsha; Changzhi; Chengdu; Chifeng; Chongqing; Dalian; Datong; Dongying; Dunhuang; Enshi; Fuzhou; Guangzhou; Guiling; Guiyang; Haikou; Hailar; Hangzhou; Hanzhong; Harbin; Hefei; Hohhot; Jiamusi; Jinan; Jingdezhen; Kashi; Kunming; Lanzhou; Manzhouli; Nanchang; Nanking; Nanning; Ningbo; Qingdao; Qingyang; Qiqihar; Sanya; Shanghai; Shantou; Shenyang; Shenzhen; Shijiazhuang; Taiyuan; Tianjin; Tongloao; Ulanhot; Urumqi; Weifang; Weihai; Wenzhou; Wu Hai; Wuhan; Xi'An; Xiamen; Xining; Xuzhou; Yan'an;
Yancheng; Yichang; Yinchuan; Yulin; Zhanjiang; & Zhengzhou.

International, scheduled destinations: Bangkok; Budapest; Hong Kong; Kula Lumpur; Osaka; Seoul; & Tokyo.

737-8FH (35090, B-5181), RBS leased for Chang'An (CGN) operations.

November 2006: 737-808 (34708, B-5182), Icelandair (ICE) leased.

December 2006: 737-36N (28606, B-2112), wet-leased to Deer Air (DER).

January 2007: Aviation Partners Boeing (APB) said Hainan Airlines (HNA) has committed to install winglets on up to 55 737-800s (25 firm and 30 option) from this summer.

A319-112 (2985, B-6169), GECAS (GEF) leased.

February 2007: Hainan Airlines (HNA) parent, (HNA) Group said it acquired a 21.66% stake in Shenzhen Financing Renting Company.

March 2007: Hainan Airlines (HNA) launched daily Beijing - Macau service aboard a 737-800.

April 2007: Hainan Airlines (HNA) bounced back into the black last year, posting a +CNY181.6 million/+$23.5 million profit, that represented a reversal from a -CNY215.7 million loss in 2006. Xinhua Financial Network (XFN) reported that (HNA)'s "core business revenue" climbed +23.7% to CNY12.45 billion against a +26.2% increase in costs to CNY10.36 billion. Passenger numbers grew +12.4% to 14.4 million, but the airline said it is targeting 12.8 million passengers this year. No explanation for the decline was provided. (HNA) was operating 101 airplanes at year end and plans to take delivery of 2 purchased 737-800s and 1 A319 and 2 leased A330s and 2 A319s this year, (XFN) said.

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 ERJ-145s and E190s in September, with the whole order arriving in 5 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 Corporation to create Chongqing Airlines (CGQ), which is expected to launch operations in June with 3 A320s. The new carrier is expected to be approved by the (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 (CREG) to start a Chongqing Airlines (CHO) (later to change name to "Western Airlines"). (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" 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).

Chinese airlines remain interested in aligning with global alliances despite the difficulties associated with joining up or integrating. With Air China (BEJ) and Shanghai Airlines (SHA) committed to Star Alliance (SAL) and China Southern Airlines (GUN) set to join SkyTeam (STM), speculation has turned toward Oneworld (ONW) and Hainan Airlines (HNA), which recently opened a new Beijing - Osaka service in cooperation with Japan Airlines (JAL). Hainan (HNA) parent (HNA) Group told "China Business" that it established a working group in January to start preparing the carrier to join an alliance. But Hainan Airlines (HNA) may be in an inferior negotiating position, according to industry analysts, because it is based at Haikou in the deep south, while alliances are targeting carriers in Beijing (Air China (BEJ)), Shanghai (Shanghai Airlines (SHA)) and Guangzhou (China Southern (GUN)). Oneworld (ONW) Managing Partner, John McCulloch told reporters last month that his group also was negotiating with China Eastern Airlines (CEA), which is based in Shanghai. Even if an alliance regards a Chinese carrier as a good fit, the hurdles that an airline must negotiate before meeting alliance standards can be significant. For example, Shanghai Airlines (SHA) has had to work on improving or restructuring its Information Technology (IT), safety management, loyalty program, sales and marketing, legal affairs and human resources departments to conform to Star requirements. The company has admitted that it has taken a long time to meet those requirements and that the price for its Star Alliance (SAL) membership is "really high." Chinese airlines also may suffer when allying with foreign carriers, as they have incurred heavy losses on international routes and have been forced to open their own markets to more experienced foreign competitors, while being unable to tap into the potential offered by foreign markets. But Shanghai Airlines (SHA) Chairman, Zhou Chi said it was worth the effort. "One single airline can't establish a foothold in every part of the world due to limitations set by national air traffic rights," he explained. "But by joining airline alliances, we can expand our international route network and better utilize our existing capacity to improve efficiency without increasing investment and fleet expansion."

May 2007: (HNA) Group, parent of Hainan Airlines (HNA) and several other carriers, reported net profit of +CNY51.2 million/+$6.6 million in the first quarter, a more than >fourfold improvement over earnings of +CNY12.1 million in the year-ago quarter. Operating revenue rose +20.6% to CNY3.45 billion against a +21.5% lift in costs to CNY2.72 billion. The company attributed the good results to "tightening cost control" and "fleet expansion," pointing out China's air transport market upturn also boosted its traffic revenue.

Hainan Airlines (HNA) parent, (HNA) Group signed a strategic cooperation agreement with AVIC II, under which the parties will cooperate on airplane purchasing and leasing. At the signing ceremony, (HNA) Group Chairman, Cheng Feng said his company's alliance with AVIC II will further the development of and investment potential in China's rapidly growing air transport industry. (HNA) said it will need a significant number of new airplanes as it looks to establish itself in the Chinese regional market, and AVIC II General Manager, Zhang Hongbiao said the consortium of Original Equipment Manufacturers (OEM)s and affiliated agencies, will work to facilitate those acquisitions. The two companies also will launch a joint regional (MRO) subsidiary and work together on general aviation operations.

Local industry analysts have said that establishing deeper relationships between airlines and Original Equipment Manufacturers (OEM)s may be an effective way to exploit the market opportunities that will continue to expand as China improves its Air Traffic Control (ATC), liberalizes air service agreements with foreign countries and moves to manufacture its own "jumbo" airplanes. Last summer, (HNA) Group ordered 50 ERJ-145s to be built by Harbin Embraer Aircraft Industry Company, a joint venture between AVIC II and Embraer (EMB).

Aviareps will handle sales and marketing efforts in Germany and Austria on behalf of Hainan Airlines (HNA).

The (HNA) Group, parent of Hainan Airlines (HNA), revealed that it is preparing to launch an airplane leasing company with AVIC II, with which it reached a strategic partnership agreement. (HNA) noted that leasing is a "promising business" in China as few domestic companies have a foothold in the field. "To accelerate the delivery of airplanes to Hainan Airlines (HNA)'s fleet" and "lowering the cost" also were cited as reasons for launching the new entity.

Leasing has become increasingly attractive in China as AVIC I, which traditionally focuses on larger airplanes, also is on the way to starting an international leasing company along with 13 aerospace firms and research agencies. But local analysts have pointed out that China's domestic leasing companies may be less competitive compared to foreign counterparts due to higher financing costs. Currently, more than >60% of the Chinese fleet, which numbers 1,028 airplanes, is on lease, but there are only five or six Chinese-owned or joint venture airplane leasing companies among the more than >100 financing lease companies in the country.

June 2007: Hainan Airlines (HNA) will launch Beijing - St Petersburg service on July 8 aboard a 767-300.

(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 the (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 Company, Shenzhen Guorui Investment Company, 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 (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 along with Xinhua Airlines (XIH), Changan Airlines (CGN), and Shanxi Airlines (CHG), and be the country's 4th-largest commercial carrier.

(HNA) Group President, Chen Feng called the license "an important milestone." It follows the April award of Grand China Air (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).

July 2007: Hainan Airlines (HNA) expects its profit for the first six months of 2006 to soar by an estimated +750% over the +CNY20.8 million/+$2.7 million in net income it earned in the year-ago period, according to a preliminary announcement released yesterday by the Shanghai Stock Exchange. The carrier credited lower domestic oil prices, and the appreciation of the yuan for the performance, but did not elaborate further.

August 2007: While USA majors lobby and issue competing press releases touting their proposals to serve China under the expanded aviation agreement signed by the two countries, four small Chinese carriers have applied to the (CAAC) (CAC) for the right to operate transpacific services in a market traditionally dominated by the country's big three and their USA counterparts. Despite the fact that Chinese airlines have faced significant competitive disadvantages on routes to the USA, four carriers - - Shanghai Airlines (SHA) Cargo, Hainan Airlines (HNA), Jade Cargo International (JDC) and Great Wall Airlines (GWZ) - - plan to operate transpacific services, and each has received approval from the (CAAC) (CAC), according to a statement from the regulator.

Shanghai Airlines (SHA) is scheduled to fly from Pudong (PVG) to Los Angeles via Anchorage (ANC) beginning in September, and to Dallas/Fort Worth (DFW) via (ANC) from next April. Jade (JDC) intends to operate a Shenzhen - (PVG) - Portland, Oregon - (DFW) - Portland - (PVG) routing, and a Shenzhen- (ANC) - Chicago O'Hare (ORD) flight beginning this month.

In March, Great Wall (GWZ) expects to fly freighters to Los Angeles (LAX) and (ORD) via (PVG) - Seoul - (ANC) and 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.

The industry in China is hoping that the seven new cargo routes to the USA will help domestic airlines improve on the 30% market share they currently hold in the international freight market. The difficulties in competing for passenger traffic were highlighted by the lack of interest from Air China (BEJ), China Southern Airlines (GUN), and China Eastern Airlines (CEA) in increasing their transpacific operations. (BEJ) Public Relations Director, Wang Yongsheng confirmed that "in the short term, we won't apply for any new routes to the USA," as (BEJ) already serves (LAX), San Francisco and New York (JFK).

In response to the increasing competition posed by railroads, (CAAC) (CAC) asked Air China (BEJ), China Southern Airlines (GUN), China Eastern Airlines (CEA), Shanghai Airlines (SHA), and Hainan Airlines (HNA) to cooperate on the Golden Route of Beijing - Shanghai, and help make transport more efficient. Launched August 6, the new "Air Express Service (AES)" has met with mixed reaction so far. Nearly 4.2 million passengers traveled on the route in 2006, accounting for 3% of China's total passenger traffic. (CAAC) (CAC) cited its desire to "facilitate business customers to enjoy faster air service" as the reason behind (AES). Of the 37 daily flights between the two cities, (BEJ) operates 14, and (CEA) 11. Average load factor exceeds >75%.
(AES) features a flight every half hour and all tickets are fully and freely endorsable. Average travel time has been cut by as much as 40% to 3 hours as the five carriers now offer unified ground handling operations, dedicated boarding and security areas and a unified billing and accounting system. While reports last week featured some support for the faster service, there also was widespread concern and speculation that (AES) was the front for an alliance that would allow the five airlines to manipulate ticket prices. The fare on the route indeed was raised while popular discounted tickets briefly disappeared. (CAAC) (CAC) denied the speculation, while (CEA) explained that the hike was due to the increased costs associated with the unified ground handling operation. Late last week, the discounted price was reintroduced as (CAAC) (CAC) clarified its antimonopoly position.

Industry analysts have noted their disapproval, arguing that market forces must dictate demand and fares and not a forced cooperation initiated by (CAAC) (CAC). The freely endorsable tickets mean that schedule and slots will determine each carrier's load. If one of the five promotes and sells a deeply discounted ticket, the other four could pay.

Despite the nascent controversy, (CAAC) (CAC) said it would consider promoting similar service on other important business trunk routes from Beijing to Guangzhou, Shenzhen and Chengdu, plus Shanghai - Shenzhen. China Southern (GUN) Beijing Branch, Vice Managing Director, Li Jun said last week that "as far as I am concerned, (CAAC) (CAC) has finished the market research for these four routes."

737-84Ps (35747, B-5337; 35749, B-5338), deliveries for "Grand China Air" (GCH) operations.

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."

China Southern Airlines (GUN), China Eastern Airlines (CEA), Hainan Airlines (HNA), and Shanghai Airlines (SHA) are scheduled to open new routes to the USA, under the (CAAC) (CAC) program, despite the fact that Chinese carriers collectively suffer heavy losses in transpacific operations. Industry analysts have pointed out that conditions may improve, if the USA and China sign a tourism agreement this year, that will ease USA visa restrictions on Chinese citizens.

Next year, (GUN) will open daily Beijing - Newark, and Guangzhou - Moscow flights, while (CEA) will start twice-weekly Shanghai - Los Angeles service. Hainan (HNA) will fly four-times-weekly from Beijing to Berlin and Seattle, and Shanghai Airlines (SHA) will fly from its namesake city to Vienna (five-times-weekly), Hamburg and Zurich (both thrice-weekly).

In 2009, (GUN) will fly from Beijing to Detroit and London, and from Guangzhou to Vancouver (all daily). Hainan (HNA) will open daily service from Beijing to Chicago and Newark, and Shanghai Airlines (SHA) will fly to Seattle and Los Angeles.

European Cargo Services (ECS) is the exclusive European General Sales Agent (GSA) for Hainan Airlines (HNA). (ECS) will market the carrier's 45 tonnes of freight capacity on its thrice-weekly 767 passenger service between Beijing and Brussels. (ECS) expects to generate some 1,200 tonnes of traffic for Hainan (HNA) in its first year of representation.

737-8BK (29673, B-5346), CIT Group (TCI) leased. 737-808 (35076, B-KBM), Boeing (TBC)/Hainan (HNA) leased to Hong Kong Airlines (CRY). 1 EMB-145LI (0992, B-3039), delivery for "Grand China Express (GCE)."

October 2007: Hainan Airlines (HNA) began construction of a new base at its Urumqi hub, that will feature a hangar, warehouses, catering facility, flight crew and office building, and a maintenance facility. The first phase of construction on the 153-acre site is scheduled to be completed by the end of 2008. Hainan (HNA) operates 13 routes within and from the Xinjiang region in northwest China. The carrier said it intends to operate routes to Central Asia and Eastern Europe from the airport.

Hainan (HNA) launched 4x-weekly Tianjin - Ningbo service aboard 737s.

Harbin Embraer Aircraft Industry (HEAI), the joint venture between Embraer and AVIC II, delivered its first ERJ-145 and the 1000th unit of the type overall to Hainan Airlines (HNA) Group subsidiary "Grand China Express (GCE)." (GCE) last year placed an order for 50 ERJ-145s to be manufactured by (HEAI) and 50 E190s to be manufactured in Brazil.

Hainan Airlines (HNA) is moving forward with its plan to launch Hefei-based Anhui Airlines, though the specific timetable has yet to be fixed. The capital of Anhui Province, Hefei is located approximately 200 miles west of Shanghai. Anhui Airlines is expected to be based at the new Hefei Xinqiao Airport, upon which construction will begin this year. It is scheduled to be operational in 2010. Industry insiders report that Hainan Airlines (HNA) will take "three steps" in conjunction with the Hefei municipal government to launch Anhui Airlines. The first is to make Hefei Luogang Airport an overnight operation base, followed by establishment of the Anhui branch company and then the launch of the carrier itself. Hefei is next to the Yangtze River Delta Economic Region. Industry analysts noted that Hainan parent (HNA) Group can take this opportunity to grab more market share in the region as the "rise of Central China" appears to be accelerating.

The (CAAC) (CAC) is aiming to boost China's long-neglected domestic regional market further, with the distribution of new subsidies, even as the recent trend of companies investing in regional startups, appears to be accelerating. According to a new regulation, scheduled to be implemented by year end, all regional routes measuring 600 km or shorter, will be eligible for the subsidies, with preference given to those opened in central, western or northeastern China. "Though government subsidies can alleviate some temporary difficulties for the regional carriers, it is much more important for these carriers to improve their profitability," China Securities Co analyst Li Lei noted. Last year, (CAAC) (CAC)'s administrative branch in the northwest was chosen on a trial basis to distribute subsidies to regional carriers operating in the region. Industry insiders credit the program with helping push Kunpeng Airlines, the Mesa Air Group/Shenzhen Airlines (SHZ) joint venture, that launched last month, to choose Xi'an as its base. Kunpeng started with three CRJ-200s and intends to add 20 50/90-seat airplanes annually, until it reaches a fleet of 160 to 200. Other signs the regional market is heating up can be found at (HNA) Group's Grand Xinhua Express (GXE) - - which currently operates 29 Do-328s but may take some of the 50 ERJ-145s and 50 EMB-190s ordered by the parent company, according to Chairman, Cheng Feng - - and China Eastern Airlines (CEA), which has confirmed its plan to launch its own regional in partnership with AVIC I.

Consolidation appears to be the development trend in China's airline industry, but Hainan Airlines (HNA) Group President, Chen Feng said that the "super carrier" idea promoted by some officials will not work. Chen was speaking after attending the Communist Party of China's national congress in Beijing. He noted that Air China (BEJ), China Southern Airlines (GUN), China Eastern Airlines (CEA) and Hainan (HNA) have controlled 90% of the domestic market since 2002, despite the increase in new entrants. "I don't think there is a possibility that these four bigger airlines will merge," he said. Air China (BEJ) President, Li Jiaxiang has insisted that "merger and consolidation with other domestic carriers" is one of (BEJ)'s targets in the next few years.

737-808 (35077, B-5358), BOC Aviation (SIL) leased. A319-112 (3285, B-6177), delivery.

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 ex-(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) (ITA) 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), and first A330-243 (875, B-6116) delivery, CIT Group (TCI) leased.

December 2007: Wang Yingming, President, replaces Chen Feng, who remains as Board Chairman of Hainan Airlines (HNA) Group.

4 orders 737-800, (BOC) Aviation (SIL) leased. (ILFC) (ILF) announced a leasing deal with Hainan Airlines (HNA) for three former Cathay Pacific Airways (CAT) A340-642s (436; 453; 475) powered by (Trent 556-61)s, to be delivered next July, October and December under 6-year leases.

737-8FH (35101, B-5359), RBS Aerospace leased and A330-243 (881, B-6118), (CIT) Group (TCI) leased.

Domestic China market share is shown on ATTACHED - "HNA-DOM-MKT-SHARE-DEC07."

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 Company in Shanghai.

February 2008: Hainan Airlines (HNA) will increase its 2007 net profit by more than >200% from the prior year, when it earned +CNY181.6 million/+$25.2 million, parent (HNA) Group said. 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.

Hainan Airlines (HNA) plans to launch its first service to North America on June 9, with 4x-weekly, Beijing - Seattle flights aboard A330-200s featuring 186Y economy and 36C business-class seats. It plans eventually to switch to 787 Dreamliners.

March 2008: Hainan Airlines (HNA) reported a net profit of +CNY651.4 million/+$92.2 million in 2007, nearly quadrupling the +CNY166.8 million earned the previous year, on a +3% lift in operating revenue to CNY12.82 billion. Operating expenses fell -0.4% to CNY10.29 billion, although fuel costs jumped to 40% of the total. Like its peers, (HNA) credited strong domestic demand and the rising yuan for its success, while also citing a "substantial improvement" in airplane utilization for its impressive financial performance. Passenger boardings rose +0.7% to 14.5 million, and cargo traffic dipped -0.5% to 197,800 tonnes. Last year, (HNA) introduced five 737-800s, one A319, and two A330s, increasing its fleet to 66: 58 737s, six A319s and the two A330s.

Looking ahead, the carrier expects to benefit from increasing demand related to this summer's Olympics. It predicted that passenger boardings will reach 16.8 million in 2008 and that the continued appreciation of the yuan "will have a positive influence on our earnings this year."

Hainan Airlines (HNA) is in crisis following the appeal of 6 pilots (FC) to the Haikou arbitration committee to have their labor contracts terminated. The 6 resigned at the end of last year, bringing to 20 the number of (HNA) pilots (FC) who have walked out since 2006. (HNA) has accepted none of the resignations and their disputes remain unresolved. Luo Zulin, one of the 6 who asked for arbitration, said the resignations were a result of "frequent overtime" and "long delays in getting their salary." (HNA) is insisting on the validity the contracts and denied Luo's accusation regarding pay. It said that if the committee ruled in the pilots (FC)'s favor, it would request several million yuan in compensation from them and the return of their licenses.

Air China (BEJ), China Eastern Airlines (CEA), Xiamen Airlines (XIA), and Xinhua Airlines (XIH) also have faced labor disputes with resigned pilots (FC), largely because Chinese carriers traditionally cover training expenses that can amount to millions of yuan per pilot (FC). There is considerable reluctance to allow them to transfer to competing carriers.

Under a Pilots Flow Management Proposal policy implemented by (CAAC) (CAC) in 2005, "the potential new employer" of these resigned pilots (FC) must attain the permission of the "old employer" before hiring, then pay compensation of CNY700,000 to CNY2.1 million/$98,300 to $294,800. According to (CAAC) (CAC) statistics, China's commercial aviation fleet numbered 1,099 airplanes last September 30 and is expected to rise to 1,250 by 2010, leading to an estimated shortfall of -200 pilots (FC) annually.

In order to make up the severe shortage, carriers are beginning to follow the internationally common practice of recruiting privately trained pilots (FC). China Southern Airlines (GUN) started the trend last May, announcing its plans to recruit 100 such pilots (FC). Sichuan Airlines (SIC) followed three months later, hiring 50 private pilots (FC). Spring Airlines (CQH), East Star Airlines (ESR), and United Eagle Airlines (UEG) have disclosed their interest in recruiting such pilots (FC).

22 Hainan Airlines (HNA) pilots (FC) have resigned since 2006, without first securing permission from the company.

737-84P (35752, B-5371), delivery and A330-243 (906, B-6088), (ILF) leased.

April 2008: Hainan Airlines (HNA) increased earnings nearly fivefold in the quarter, reporting a +CNY286.7 million profit, compared to +CNY51.2 million in the same period last year.

737-84P (35758, B-5372) and A330-243 (919, B-6089), deliveries.

May 2008: Hainan Airlines (HNA) still is exploring the possibility of joining an alliance although it has not made a firm decision, Liang Pubin, General Manager of the carrier's Brussels office, said. "We have a team that is exploring the possibility," he said. "The general idea is that it is a necessity to join an alliance, but we have to research the actual advantage and disadvantages of becoming an alliance member and then of course, we have to see what the possibilities are. It's not because you want to join a certain alliance that you can join." There has been speculation that (HNA) Group, China's fourth-largest aviation company with a fleet of 144 airplanes and four airlines (Hainan (HNA), China Xinhua Airlines (XIH), Chang'an Airlines (CGN), and Shanxi Airlines (CHG)), has expressed interest in joining Oneworld (ONW), but Liang would not confirm.

He also said the carrier's long-haul network expansion in on course. A 4x-weekly Beijing - Seattle will commence June 9 - - Hainan (HNA)'s first North American flight - - and a 4x-weekly, Beijing (PEK) - Berlin Tegel begins September 5. It has applied for rights to a 3x-weekly, Beijing - Cairo and a 2x-weekly, Beijing - Guangzhou - Johannesburg, both aboard A340s. It also is seeking regulatory approval to launch 3x-weekly, Beijing - Shanghai - Brussels (BRU) to complement its current 4x-weekly, (PEK) - (BRU). The latter service recently was upgraded from a 767 to a new A330-200, and is slated for another upgrade to A340s this summer, depending on the arrival of the 3 ex-Cathay Pacific Airways (CAT) A340s it has leased from (ILFC) (ILF).

airBerlin (BER) launched its China service with 5x-weekly, A330 services from Dusseldorf to Beijing and Shanghai Pudong. (BER) will interline with Hainan Airlines (HNA) on connecting flights to other Chinese destinations, and will return the favor, when Hainan (HNA) launches its Beijing - Berlin flights on September 5. From November, (BER) will upgrade its business class (C) cabin on the routes to Premium Business Class with installation of 30 new lie-flat seats.

737-84P (35754, B-5373), delivery.

June 2008: Hainan Airlines (HNA) is joining with the Yunnan local government in southwestern 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 more than >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 more than 30 airplanes within 3 years. He added that the carrier is interested in acquiring A330s and 767s to operate international routes to Southeast Asia countries. Industry analysts pointed out that it will challenge China Eastern Airlines (CEA)'S current dominant position in Yunnan.

First (HNA) direct flight Beijing - Seattle, by an A330-200. Production delays prevented the 787 Dreamliner being used for this service. It will operate the service 4x-weekly going forward.

July 2008: The first weekend of charter flights across the Taiwan Strait concluded with 11 carriers having offered services, which many regard as an important step toward the opening of scheduled flights between the Chinese mainland and Taiwan. The 11 airlines are Air China (BEJ), China Southern Airlines (GUN), China Eastern Airlines (CEA), Hainan Airlines (HNA), Shanghai Airlines (SHA), Xiamen Airlines (XIA), China Airlines (CHI), Mandarin Airlines (MDN), TransAsia Airways (FSH), Uni Air (MAK), and (EVA) Air.

Taiwanese aviation authorities reported that 6 airports handled 72 flights transporting 12,000 passengers July 4 through 7. Taipei Taoyuan handled 32 flights, followed by Taipei Songshan with 26. Makung (6), Kaohsiung (4), Taichung (2), and Hualien (2) handled the remainder. Corresponding statistics for the mainland were unavailable, but the (CAAC) (CAC) noted that there will be 144 roundtrip flights across the strait this month. Mainland carriers expect the flights to provide a new growth point as they have experienced slowing increases in demand, especially in May, when passenger volume dipped 1.1% year-over-year, the first decrease since 2003.

(GUN) Chairman Liu Shaoyong, who was aboard the inaugural A330 flight to Taipei, called the current allowance "too little" and said that "daily regular direct flights [without having to overfly Hong Kong] should be realized as soon as possible."

China Airlines (CHI)'s former Chairman, Zhao Guoshuai, who resigned this week, agreed with Liu. He argued that "it is far from enough to operate only 72 charter flights every weekend." He expressed confidence that the flights "will exert a positive effect on China Airlines (CHI)" as the mainland is a new market for the Taipei-based carrier.

Meantime, (CEA) already has established an office in Taipei. According to Managing Director, Cao Jianxiong, (CEA) plans to recruit staff and cabin crew in Taiwan in the future, while (CHI) and (EVA) act as agents for ticket sales.

Chinese carriers were dealt another blow to their bottom lines this month as authorities decided to raise the jet fuel price by +CNY720/+ $104.83 per ton.

Air China (BEJ) Board Secretary, Huang Bin confirmed that the increase took effect on July 1. It is the third time fuel prices have gone up this year following a +CNY210 per ton increase in the first quarter and a +CNY1,500 hike on June 20. China's quarterly adjustment of jet fuel prices traditionally takes import costs into consideration, which largely has shielded airlines from the soaring international oil prices over the past two years.

CITIC Securities Company aviation analyst, Ma Xiaoli said he expects China Southern Airlines (GUN) will be hit hardest by the domestic increase as it flies the largest number of domestic routes. According to his estimate, (GUN) faces a reduction of -CNY250 million in marginal profit for every +CNY100 increase in the cost of jet fuel, while China Eastern Airlines (CEA)'s bottom line would sink by -CNY220 million and Air China (BEJ)'s would drop by -CNY180 million.

To mitigate rising fuel expenses, Chinese carriers collectively approved an increase in domestic fuel surcharges beginning July 1. In addition, (BEJ), (GUN), Shanghai Airlines (SHA), and Hainan Airlines (HNA) will raise surcharges on international routes.

(CEA) Board Secretary, Luo Zhuping said that while higher surcharges are helpful, "The shrinking market demand is a bigger blow for airlines than the surging fuel price. If fuel surcharges keep on rising, it will impact the market demand to reduce further, which will lead to a drop in airfares."

Huang shares the same view. He said that (BEJ) will be cautious as "the company has to take market tolerance into account." In the meantime, Morgan Stanley analyst, Edward Xu wrote in a research note that Chinese carriers will report poor traffic data for June.

At the Farnborough Air Show, Hainan Airlines (HNA) selected the (IAE) (V2500) to power 13 A320s, backed by a long-term "V2500Select" aftermarket agreement with a combined value of $350 million.

August 2008: Hainan Airlines (HNA) said it expects its net profit for the first half of 2008 to "achieve a growth of over >50%" from the +CNY189.7 million/+$27.6 million reported in the year-ago semester. It cited the "continuous appreciation" of the yuan and the "prosperous development of the domestic aviation industry" for the result. It is scheduled to release its first-half figures on August 30.

Despite the continuing decline in domestic demand, Hainan Airlines (HNA) is continuing to expand and now is preparing to launch a new airline expected to be based in Hangzhou.

Hainan parent, (HNA) Group signed a cooperation agreement with Qian Tang Aviation Group creating a joint venture called "Qian Tang Air (QTG)," which is expected to capitalize on the economic growth occurring in Zhejiang Province. (QTG)'s registered capital will be CNY300 million. It will operate three leased A320s initially and Chairman, Chen Xijie noted that the startup plans to be operating a combined 30 A320s and A330s in three years. Qian Tang (QTG) ordered 10 A320s last year.

(HNA) (CEO) Wang Jian said, "We expect the market demand in Zhejiang Province will be quite robust as the number of its outbound passengers and business passengers keep on rising."

(HNA) subsidiary Grand China Express Airlines (GCEA), formerly Grand Xinhua Express, plans to sell a stake to Hyundai Heavy Industries so as to improve its financial performance. The Tianjin-based regional has signed a letter of intent (LOI) for cooperation with Hyundai, which is conducting due diligence on the airline in order to determine the size of its investment. It is widely speculated that the Korean company will purchase a 20% stake with an investment of about CNY120 million/$17.5 million. (GCEA) has suffered along with other Chinese regionals. Launched in March 2007, it reported a large operating deficit as it struggles to establish a broad regional network, even though its fleet of 40 airplanes is the segment's largest. It plans to introduce 50 ERJ-145s and 50 E190s over the next 5 years.

September 2008: Hainan Airlines (HNA) reported a net profit of +CNY311 million/+$45.5 million in the first half, up +63.9% over the +CNY189.7 million earned in the year-ago semester, thanks largely to the appreciating yuan. Operating revenue rose +1.5% year-over-year to CNY6.34 billion, but (HNA) did not disclose the amount of its currency gains. The yuan has been the only reliable contributor to Chinese carriers' bottom lines in 2008, owing to the combined burdens of falling demand, fierce competition and high fuel prices. (HNA)'s operating expenses rose +3.1% to CNY5.45 billion. Passenger boardings fell -3.4% to 7.5 million, while cargo volume dipped -1.4% to 101,300 tonnes.

Looking ahead, (HNA) warned that its financial performance will be "heavily impacted" if domestic fuel prices continue to rise. They went up by +CNY720 per ton in July, the third increase this year.

Hainan Airlines (HNA) began flying A330-200s between Beijing (where it competes with Air China (BEJ) and China Southern (GUN)) and Berlin. No other carrier operates that route. AirBerlin (BER) flies from Dusseldorf to Beijing, but will end service next month.

(HNA) announced that its Chang'an Airlines (CGN) subsidiary leased out two E190s to Grand China Express Airlines for one year.

Air China (BEJ) and China Southern Airlines (GUN) both endured double-digit year-over-year traffic declines in August, and while some of the drop can be attributed to heightened security related to the Beijing Olympics, slowing domestic economic growth likely portends a poor full-year 2008 traffic and financial performance for Chinese carriers. (BEJ)'s overall passenger traffic plummeted -16.3% year-over-year in August to 5.26 billion (RPK)s on a capacity decrease of -0.9% to 7.4 billion (ASK)s. Its load factor of 71.1% LF was down by -13 points. Passenger boardings dropped -16.6% to 2.77 million, while cargo volume fell -4.1%. Similarly, China Southern (GUN) suffered a sharp decline in August, as passenger boardings plunged -16.2% to 4.99 million, with load factor at 71.2% LF, down -8.7 points from last year and a new low for 2008.

Spring Airlines (CQH) Chairman, Wang Zhenghua said he is optimistic that domestic demand will rebound in September and October, a view that is not widely shared. But even he commented that this month and next provide the only opportunity for carriers to improve their domestic traffic performance this year.

China Eastern Airlines (CEA) has not yet released its traffic statistics for August, but in contrast to Wang, (CEA) Board Secretary Luo Zhuping expressed pessimism regarding the remainder of 2008. "The biggest problem we are facing now is the continuous decline of domestic demand. The winter is coming and uncertain economic prospects make it difficult for domestic demand to rebound in the short term."

Shenyin Wanguo Securities, Aviation Analyst, Li Shurong agreed with Luo, pointing out that "high domestic fuel prices show little possibility [of falling] for the time being and the slowdown of yuan appreciation, and continuous decline of domestic demand are expected to exert a negative impact on Chinese carriers." China International Capital Corp predicted that "excepting Air China (BEJ), most [of China's] carriers [including] China Southern (GUN), China Eastern (CEA), Hainan Airlines (HNA), and Shanghai Airlines (SHA) will post a full-year net loss in 2008."

(HNA)'s second quarter financial results = net profit of +$1 million and an operating profit of +$4 million. This indicates that (HNA) is emerging as the best-run and most profitable Chinese airline over time, even on an operating basis.

China Eastern Airlines (CEA) and Hainan Airlines (HNA) experienced a sharp traffic decline in August, another sign of China's sagging domestic passenger market. (CEA) posted a -23.1% year-over-year drop to 2.92 million passenger boardings with a load factor of 69.4% LF, down -8.6 points. (HNA) transported 1.2 million passengers, a -5.2% decrease, as load factor fell -7.8 points to 74.3% LF. China Galaxy Securities Co aviation analyst, Mao Ang projected that Chinese carriers will post an "unpromising" financial performance in the third quarter owing to rising fuel prices, "falling demand," and "the slowdown of yuan appreciation."

October 2008: Hainan Airlines (HNA) is headquartered in Haikou, the provincial capital of China's southern most Hainan Island, though Beijing is its main operations hub.

Among 90 cities Hainan Airlines (HNA) serves are: Baotou; Beijing; Changchun; Changsha; Changzhi; Cheongju; Chongqing; Dalian; Datong; Dongying; Enshi; Fuzhou; Guangzhou; Guilin; Guiyang; Haikou; Hangzhow; Harbin; Hongqiao; Kaxqar; Kiamer; Kiamusze; Kunming; Lanzhow; Manzhouli; Mudanjiang; Nanchang; Nanjing; Ningbo; Pudong; Qingdao; Qiqihaer; Sanya; Shanghai; Shantou; Shenzhen; Shenyang; Tianjing; Taiyuan; Urumqi; Weifang; Wenzhou; Wuhai; & Xi-an; Xining; Xuzhow; Yichang; Yinchuan; Zhangjiajie; Zhengzhou; Zhuhai; within China, and internationally: Astana; Berlin, Germany; Brussels, Belgium; Budapest, Hungary; Dubai; Luanda, Angola; Osaka, Japan; Pusan, Korea; Krasnoyarsk, Novosibirsk, & St Petersburg, Russia; Seattle, USA; and Seoul, Korea.

Amadeus announced the deployment of its e-Retail solution at Hainan Airlines (HNA). The booking engine allows customers to book their tickets in English, French, German, Japanese, Korean, and Simplified Chinese.

November 2008: Hainan Airlines (HNA) and Shanghai Airlines (SHA) posted third-quarter net losses of -CNY260.8 million/-$38.1 million and -CNY437.4 million, respectively, as declining domestic demand and high fuel prices continued to wreak havoc on China's airlines.

Hainan (HNA) reported a +CNY228.9 million profit in the third quarter of 2007, while (SHA) was -CNY77.3 million in the black.

In the three months ended September 30, (HNA)'s operating revenue fell -8% to CNY3.41 billion against a +9.7% increase in operating expenses to CNY3.07 billion. (SHA)'s operating revenue dropped -9% to CNY3.15 billion, while expenses climbed +6% to CNY3.59 billion. Neither carrier released traffic figures.

Through the first nine months, (HNA) remained profitable to the tune of +CNY50.2 million, although that figure represented a steep decline from the +CNY419 million earned in the year-ago period. (SHA) lost -CNY414 million through the nine months.

The dream of a direct routing across the Taiwan Strait is closer to reality following the signing of an agreement between Beijing's Association for Relations Across the Taiwan Strait and Taipei's Strait Exchange Foundation. The deal, which will take effect in 40 days, will allow carriers to bypass Hong Kong airspace and reduce flight time, operating costs, fuel burn, and emissions.

Taiwanese carriers will have access to 16 cities in mainland China in addition to Beijing, Shanghai, Guangzhou, Xiamen, and Nanjing. They are Chengdu, Chongqing, Hangzhou, Dalian, Guilin, Shenzhen, Wuhan, Fuzhou, Qingdao, Changsha, Haikou, Kunming, Xi'an, Shenyang, Tianjin, and Zhengzhou. The number of permitted weekly roundtrip flights will rise from the current 36 to 108.

Mainland carriers welcomed the move. The agreement allows 60 return cargo flights per month operated by 2 - 3 mainland and 2 - 3 Taiwanese airlines. Mainland carriers will have access to Taipei and Kaohsiung, while their counterparts will fly to Shanghai and Guangzhou.

Nine mainland Chinese carriers were selected to operate weekday flights across the Taiwan Strait and are expected to launch service on December 15, according to the (CAAC) (CAC). In addition to Air China (BEJ), China Eastern Airlines (CEA), China Southern Airlines (GUN), Hainan Airlines (HNA), Xiamen Airlines (XIA), and Shanghai Airlines (SHA), which all already operate weekend cross-strait flights, Sichuan Airlines (SIC), Shandong Airlines (SHG) and Shenzhen Airlines (SHZ) were tapped to operate the weekday flights.

Mainland carriers are permitted to operate 54 weekday flights per week. According to the (CAAC) (CAC), (BEJ) will operate 10 while 12 have been allotted to (CEA), 10 to (GUN), 5 to (HNA), 6 to Xiamen (XIA), and 5 to (SHA). Sichuan (SIC), Shandong (SHG), and Shenzhen (SHZ) each have been granted permission to operate 2 weekly weekday flights.

Regarding cross-strait cargo flights, (CEA) subsidiary, China Cargo Airlines (CKK), China Southern Airlines (GUN), and Air China Cargo (CAO) have been selected. China Cargo Airlines (CKK) and (GUN) each are expected to operate 10 monthly flights from Shanghai and Guangzhou respectively, while Air China Cargo (CAO) is expected to operate 5 monthly flights from both Shanghai and Guangzhou.

Shenzhen Airlines (SHZ) plans to launch Kunming Airlines in January in the capital of Yunnan Province. Preparations for Kunming Airlines' launch have been underway since 2004 and the carrier gained (CAAC) (CAC) approval in 2005. But for various reasons, the preparations were suspended for some time, before being revived earlier this year when Shenzhen Airlines (SHZ) came forward to say it would be the controlling stakeholder. It also will provide airplanes and Maintenance Repair & Overhaul (MRO) support.

Kunming Airlines Chairman, Wang Qingmin noted that the carrier will launch with three airplanes, with plans to grow the fleet to 10 in 2009, 30 to 40 in 2010, 80 to 100 by 2015, and 150 to 200 by 2022. It eventually will open additional operating bases in Xi'an, Guangzhou, Tianjin, and Hangzhou.

Located in southwestern China, Yunnan is home to numerous resorts and is a popular tourist destination. Kunming Airlines will not be without competition; Hainan Airlines (HNA) signed a cooperative agreement with the Yunnan government in June to launch Yunnan Airlines, which will be comprised mainly of the assets of Lucky Air (LKY).

Despite the Chinese government's attempt to ease the burden on airlines by reducing landing fees -20% in March, 29 Chinese carriers had failed to pay about CNY4 billion/$585.1 million combined to airports as of September 30, according to the China Civil Airports Association (CCAA). The (CCAA) noted that domestic airlines owed CNY532 million on February 29, with Hainan Airlines (HNA) in arrears -CNY102.2 million. China's big three of Air China (BEJ), China Southern Airlines (GUN), and China Eastern Airlines (CEA) owed CNY45.7 million, CNY64.9 million and CNY44.2 million, respectively. Smaller privately held carriers like East Star Airlines (UEG), Okay Airways (OKA), and Juneyao Airlines (JYA) are debtors as well. The (CCAA) Secretary General, Wang Jian said the defaults mainly comprise fees covering landing, parking and security services. Chengdu-based Eagle Airlines (UEG) reportedly has grounded two airplanes, owing to its shortage of liquid capital and severe debt burden. The (CCAA) said Eagle (UEG)'s defaults had reached CNY39.5 million as of February 29.

In order to defend airports' interests, the (CCAA) vowed to "take collective action" against defaulting carriers, but it backed off the stance later and said it had "constructive" talks with the China Air Transport Association, which represents domestic airlines. The organizations agreed to maintain communication in search of a solution.

December 2008: HNA Group subsidiary, Grand China Express Airlines (GCEA) is expected to receive a CNY200 million/$29.1 million injection from the Tianjin municipal government following the signing of an agreement. (GCEA) has been suffering from operating losses and struggling to survive since its March 2007 launch owing to the "immaturity of the Chinese regional market," spokesperson, Cui Kai said. (GCEA) is joining the growing trend of domestic airlines looking for handouts. China Southern Airlines (GUN) and China Eastern Airlines (CEA) each have been approved to get CNY3 billion from Beijing, while (HNA) and Shanghai Airlines (SHA) have applied for a capital injection from the Hainan provincial government and Shanghai municipal government respectively

It has been speculated that (HNA) has requested CNY1.5 billion. (SHA) Chairman, Zhou Chi told foreign media that the airline's third-quarter debt ratio was 91.4% but that its request is far below the CNY3 billion received by (GUN) and (CEA). Air China (BEJ) has requested that parent China National Aviation Holding Co. inject capital in order to reduce its 69% debt ratio, the lowest among China's big three carriers, but has not yet received a reply. In the meantime, (BEJ) plans to circulate medium-term notes worth CNY6 billion to "adjust the debt structure" and "increase flowing capital."

Chinese airlines have suffered declining demand over the past few months, but the market showed some recovery in November. (BEJ) transported 2.9 million passengers last month, up +4.9% year-over-year, on a +8.3% rise in domestic-route boardings to 2.4 million. (GUN) carried 4.6 million passengers on domestic routes, up +7.1%, but (CEA) reported a -0.8% decrease to 3.3 million. Load factors fell for all three - - (BEJ)'s was down -3 points to 75.6% LF, (CEA)'s off 6.3 points to 69.7% LF, and (GUN)'s down -1.5 points to 74.9% LF.

(HNA) said it has cut some "unprofitable routes" and reduced salaries by -30%, but it still plans to spend CNY2.35 billion on the purchase of a 45% stake in Beijing Yanjing Hotel Company and a 95% share of a firm with significant Beijing real estate holdings, as it plots its expansion in the capital.

January 2009: Air Berlin (BER) and Hainan Airlines (HNA) began code sharing on (HNA)'s 3x-weekly, Beijing - Berlin Tegel service and on (BER)'s connecting flights from 7 German airports, Vienna, and Zurich, effective Sunday. (BER) and (HNA) linked their loyalty programs in November.

Rockwell Collins won a deal with (HNA) to provide communication, navigation and surveillance avionics for 13 A320s. The products include RC's MultiScan Hazard Detection System, GLU-920 MMR, ADF-900, DME-900, HFS-900D Data Radio, CPL-920D Coupling Unit, VHF-920 transceiver and VOR-900 receiver. Deliveries will begin in 2010.

3 737-84Ps (35285, B-5427), (ILF) leased, (35764, B-5408), delivery, wet-leased to Hong Kong Air (CRY), (36541, B-5418), (GEF) leased, 737-86N (36541, B5418), (GEF) leased, and A319-132 (3768, B-6192), (ILF) leased, for Deer Air (DER) operations.

February 2009: Undeterred by the operating environment that has resulted in steep losses at Chinese carriers, Shenzhen Airlines (SHZ) plans to go ahead with the launch of its Kunming Airlines (KMG) subsidiary on February 15 as it searches for a foothold in the Yunnan market. The new venture has registered capital of CNY80 million/$11.7 million, with Shenzhen holding an 80% stake. Private investor, Wang Qingmin will take the remaining 20% with a CNY16 million investment.

(KMG)'s inaugural flight will be a Kunming - Changsha - Harbin routing. It initially will operate two 737-700s and one 737-800 provided by (SHZ), which also will furnish cabin crew (FC)/(CA) and Maintenance, Repair & Overhaul (MRO) support.

(SHZ) has ambitious plans for Kunming. (KMG) will operate 10 airplanes by year end on 10 domestic routes, 30 to 40 airplanes by the end of next year, 80 to 100 by 2015, and 150 to 200 by 2022.

Located in southwestern China, Yunnan is home to numerous resorts and is a popular tourist destination. (KMG) will face competition. China Eastern Airlines (CEA), which boasts the largest share (39.5%) of the Yunnan market, plans to turn its provincial branch company into a separate subsidiary by selling shares to the Yunnan government. Hainan Airlines (HNA) signed an agreement with the provincial government last June to launch Yunnan Airlines, which will be comprised mainly of the assets of Lucky Air (LKY), which accounts for a 9.6% share of the market.

A330-243 (982, B-6133), (ILF) leased.

March 2009: Rolls-Royce (RRC) signed a contract with the (HNA) Group for provision of (Trent 700EP)s to power Hong Kong Airlines (CRY)'s fleet of 20 new A330s. The contract is valued at $1.2 billion at list prices and includes a long-term "TotalCare" services agreement. The first A330 is scheduled for delivery in 2010. (HNA) already operates (Trent)-powered A330-200s and (Trent 500)-powered A340-600s.

3 737-84Ps (34031, B-5416; 34032, B-5430; 34033, B-5465), deliveries, 3 737-86N (35639, B-5417; 36542, B-5428; 36543, B-5429), (GEF) leased, and E190 (0268, B-3151), delivery for Grand China Express (GCE) operations. A319-132 (3849, B-6193), delivery for Deer Air (DER) operations.

April 2009: Hainan Airlines (HNA) posted a net loss of -CNY1.42 billion/-$208.3 million in 2008, a big reversal from the +CNY626.9 million profit reported in 2007, on a +19% lift in operating revenue to CNY13.55 billion. Operating expenses climbed +18.2% to CNY12.52 billion. (HNA) blamed "the global financial crisis, domestic natural disasters, declining market demand and soaring fuel prices" for the result.

Last year (HNA) introduced seven 737-800s, two A330s and one A340 to the fleet. (HNA) plans to take delivery of two A340s, three A330s, nine A319s and 24 737-800s in 2009. It operated a fleet of 77 airplanes as of December 31.

Passenger boardings dropped -3.6% to 14.4 million, while cargo volume fell -6% to 186,500 tonnes. Passenger load factor slid -2 points to 78.5% LF.

Looking ahead, (HNA) expects "opportunities to coexist with challenges" this year as the worsening external operating environment will continue to impact demand but "the drop of fuel price, yuan appreciation and (CAAC) (CAC)'s favorable policies implemented at the end of last year" will have positive effects on its financial performance.

(HNA) also announced its first-quarter 2009 result, a +CNY31.8 million/+$5 million net profit that was -88.9% lower than the +CNY286.7 million posted in the year-ago quarter. Operating revenue decreased -4% to CNY3.43 billion, while expenses fell -1.1% to CNY2.71 billion.

Airlines on either side of the Taiwan Strait are expected to reap further benefits following the recent signing of an expanded agreement by the Taipei-based Strait Exchange Foundation and the Beijing-based Association for Relations Across the Taiwan Strait that will more than double the number of permitted flights. Direct cross-strait flights will be increased from the current 108 per week to 270. The increase likely will take affect in July. In addition, Taiwanese carriers will be granted access to six new cities - - Hefei, Harbin, Nanchang, Guiyang, Ningbo and Jinan - - bringing to 27 the number of mainland gateways available. Airlines flying to Taiwan from Guangzhou, Shenzhen and Xiamen no longer will be required to bypass Hong Kong, while an additional route to the north has been created to alleviate crowding aboard the increasingly popular services.

The frequency increase is not as high as was anticipated in February but still is significant. Cross-strait routes enjoy load factors of more than >80%, higher than nearly all domestic mainland and international routes despite the global economic and industry downturn. "The cross-strait routes are 'golden' routes, as they are the most profitable," (EVA) Air mainland spokesperson, Ke Jincheng said. "The supplementary agreement has encouraged us a lot and is very positive news for our carriers hit hard by the global financial crisis." (EVA)'s 1st quarter was its first 3-month period in the black since the 3rd quarter of 2007.

Industry analysts pointed out that China Eastern Airlines (CEA) should benefit most from the expanded agreement, as the Shanghai-based carrier has bases in Hefei, Nanchang, Ningbo and Jinan, while China Southern Airlines (GUN) has bases in Harbin and Guiyang, and Air China (BEJ) has a base in Jinan. (CEA) Board Secretary, Luo Zhuping said the carrier's cross-strait routes have operated at 80% to 90% capacity and that it plans to fly to Taiwan from the new cities.

On the cargo front, the new agreement permits belly freight for the first time and boosts cargo flights from the current 60 per month to 112.

A319-132 (3851, B3851), delivery for Deer Air (DER) operations.

May 2009: Hainan Airlines Group plans to relaunch its "Grand China Express Airlines" subsidiary as "Tianjin Airlines" on June 8 after reaching a deal with the local government. Originally started in June 2007, Grand China operated 10 E190s, 12 ERJ-145s and 29 Do 328-300s in April on more than >80 domestic routes. In December, the Tianjin government agreed to inject CNY200 million/$29.3 million into Grand China, giving it a 15.4% stake in the reconstituted carrier, which has been approved by the (CAAC) (CAC). Hainan (HNA) will remain the controlling stakeholder, expanding its share in Tianjin Airlines to 83.4% with an additional investment of CNY500 million. Its Hainan Airlines (HNA) subsidiary holds the remaining 1.5%. The new airline is expected to operate 100 airplanes on more than >500 routes to 100 cities by 2012.

(HNA) is not the only domestic carrier to seek local government support. It has been reported that Tianjin-based Okay Airways (OKA) also plans to introduce the Tianjin government as its strategic investor. "It had planned to purchase a 40% stake of Okay Airways, but the sides haven't reached an agreement yet," a source close to the issue said.

(HNA) is expected to receive a CNY3 billion/$439 million capital injection from the Hainan provincial government and its parent the Hainan Airlines Group (HAG) to facilitate fleet expansion and improve its debt ratio. The provincial government and the (HAG) each will provide CNY1.5 billion to (HNA). The money is intended to reduce the Haikou-based carrier's debt ratio to 81%. (HNA) plans to introduce 90 new airplanes in 2009 to 2013. They will cost around CNY24.3 billion; the capital injection is aimed at broadening airplane financing channels available to (HNA), Guotai Junan Securities noted. China Eastern Airlines (CEA), China Southern Airlines (GUN), Shanghai Airlines (SHA) and Grand China Express have received CNY7 billion, CNY3 billion, CNY1 billion, and CNY200 million government capital injections, respectively.

2 737-84Ps (34034, B-5466; 36779, B-5467), deliveries.

June 2009: China Eastern Airlines (CEA) has partnered with the Yunnan provincial government to launch a joint venture based on (CEA)'s Yunnan branch subsidiary that will endeavor to build Kunming into a regional hub. (CEA) is expected to sell a stake in the branch company to the government, although it is widely speculated that (CEA) will remain the controlling shareholder.

In February, (CEA) Chairman, Liu Shaoyong noted that the Shanghai-based carrier is looking to buttress its network with regional hubs at Kunming and Xi'an. Its Yunnan branch commands 45% of the provincial market and was profitable in the first quarter, although it did not disclose that figure. The new venture will face competition. Hainan Airlines (HNA) signed an agreement with the provincial government last June to launch Yunnan Airlines (YUN). It will be comprised mainly of the assets of Lucky Air (LKY), which accounts for 9.6% of the market.

Shenzhen Airlines (SHZ) launched Kunming Airlines (KMG) on February 15 and is looking at expanding its fleet to 10 airplanes by year end operating 10 domestic routes. It hopes to be operating 30 to 40 airplanes by the end of 2010, 80 to 100 by 2015, and 150 to 200 by 2022. It currently operates two 737-700s and one 737-800 provided by Shenzhen (SHZ).

(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, second 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 three 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).

(HNA) re-launched its Grand China Express Airlines (GCEA) subsidiary as "Tianjin Airlines," part of its plan to focus on domestic regional market expansion this year and in 2010, according to Chairman, Chen Feng. Tianjin-based, (GCEA) has been loss-making since its June 2007 launch. The re-launched Tianjin Airlines has a registered capital of CNY1.3 billion/$190 million. (HNA) will remain the controlling stakeholder and expanded its holding to more than >83% with an additional investment of CNY500 million. The Tianjin local government holds more than >15% and has injected CNY200 million into the carrier.

Tianjin is expected to keep (GCEA)'s existing routes as well as add new routes including Tianjin - Xi'an - Guiyang, Tianjin - Weihai, and Tianjin - Zhengzhou - Nanchang. Chen said that the airline will expand its fleet to 30 airplanes comprising seven ERJ-145s, 15 E190s and eight 767-300s by 2013. "Tianjin would mainly operate domestic regional routes with ERJ-145s and E-190s [but] also we plan to open some international routes operated by 767-300s," he said.

737-84P (35748, B-5482), delivery.

July 2009: China Eastern Airlines (CEA) will benefit the most from the agreement reached in April to expand significantly the number of flights permitted across the Taiwan Strait, according to a cross-strait distribution plan released by the (CAAC) (CAC). The Taipei-based Strait Exchange Foundation and the Beijing-based Association for Relations Across the Taiwan Strait, signed the accord that increases from 108 to 270 the number of direct flights allowed beginning this month. Under the (CAC)'s plan, (CEA) is designated to operate 58 weekly flights to Taipei from Shanghai, Nanjing, Wuhan, Qingdao, Kunming, Xi'an, Hefei, Ningbo, and Nanchang. (CEA) Board Secretary, Luo Zhuping noted that the carrier's cross-strait routes are among its most profitable and have operated at 80% to 90% (ASK) capacity on average.

Air China (BEJ) was assigned 54 weekly flights to Taipei from Beijing, Shanghai, Chengdu, Chongqing, Hangzhou, Tianjin, and Guiyang. China Southern Airlines (GUN) also was allocated 54 weekly flights to Taipei to be operated from Shanghai, Guangzhou, Xiamen, Dalian, Guilin, Shenzhen, Wuhan, Changsha, Haikou, Shenyang, Zhengzhou, Harbin, and Guiyang.

Hainan Airlines (HNA) and Shanghai Airlines (SHA) each were allocated 20 weekly flights, while Xiamen Airlines (XIA) was given 22. Sichuan Airlines (SIC), Shandong Airlines (SHG) and Shenzhen Airlines (SHZ) were granted 14 weekly flights each.

On the cargo front, Air China Cargo (CAO) was assigned 10 weekly flights to Taipei from Shanghai and Guangzhou, while (CEA) subsidiary China Cargo Airlines (CKK) was assigned eight weekly flights from Shanghai to Taipei and China Southern (GUN) was assigned 10 weekly flights from Guangzhou to Taipei.

Hainan Airlines (HNA) opened a branch office in Shenzhen and said the move is part of an effort to expand its presence in the Pearl River region. "We plan to interconnect Shenzhen, Guangzhou and Zhuhai with Hong Kong," (HNA) VP Marketing, Chen Ming said. (HNA) already has set up a branch office in Guangzhou and a sales center in Zhuha and holds 45% stakes in Hong Kong Express Airways (HKE) and Hong Kong Airlines (CRY).

(HNA) currently has an 8% market share in Shenzhen, operating 10 737s and three freighters on 25 domestic routes. It is targeting a 12% share by 2012 and 16% by 2016. It plans to allocate 50 more airplanes to Shenzhen in the five years after the airport's second runway is completed in 2011. It also plans to add two 737F freighters and one 747F freighter to the market by 2010 to open more domestic as well as international cargo routes.

2 737-86Ns (35648, B-5480; 35649, B-5481), (GEF) leased. A319-133 (3638, B-6400), delivery.

August 2009: Hainan Airlines (HNA) earned a net profit in the 2009 first half, according to Chairman, Chen Feng, who declined to reveal the exact figure. (HNA) is scheduled to release a detailed financial report for the year's first 6 months at the end of August. (HNA) posted net income of +CNY311 million/+$45.4 million in the first half of 2008.

Meanwhile, (HNA) is busy expanding its domestic footprint and revealed that it plans to launch "Dalian Airlines" in conjunction with the local government. It signed a cooperative agreement with the Dalian government but the share proportion hasn't been disclosed. The coastal city in northeast China is a favorite of tourists.

Cooperation with local governments is becoming increasingly common among Chinese airlines. For example, (HNA) subsidiary, Lucky Air (LKY) received a +CNY290 million capital injection from the Yunnan provincial government in June. China Eastern Airlines sold a 35% stake in its Yunnan branch company to the Yunnan provincial government in May while Shenzhen Airlines (SHZ) is preparing to launch Ningxia Airlines with the Ningxia government.

Industry analysts commented that China's carriers not only get cash infusions from their associations with local governments but also favorable regulatory treatment from authorities in the investing government.

2 737-84Ps (35763, B-5539; 36783, B-5538), deliveries and A330-223 (1034, F-WWKO), Hong Kong Airlines (CRY) leased.

September 2009: Hainan Airlines (HNA) posted net income of +CNY175 million/+$25.6 million in the first half based on domestic accounting standards, down -43.7% from the +CNY311 million reported in the year-ago period, on a -3.5% decrease in operating revenue to CNY6.12 billion. Half-year operating expenses fell -5.5% to CNY5.15 billion. It is noteworthy that the carrier reported only a +CNY9.2 million profit, excluding government subsidies, down -96.8% from the comparable figure last year. It attributed the fall to the global financial crisis, H1N1 flu and lower airfares caused by "fierce" domestic competition. It said most airlines redeployed international capacity to the domestic market as demand for long-haul travel slid.

(HNA) introduced 15 737-800s, one A330 and two A340s during the semester and phased out one 737-300, one 737-400 and two A319s. (ANA) had a fleet of 91 airplanes as of June 30 (11 737-300s, nine 737-400s, 56 737-800s, three 767-300s, four A319s, five A330-200s and three A340-600s).

Boosted by the domestic market's strong recovery, passenger boardings climbed 13.2% to 8.1 million and load factor fell 3.5 points to 77%. Cargo volume rose 0.4% to 97,500 tons.

(HNA) expects to improve its performance in the second half as "stable growth of the domestic market, lower fuel prices and gradual implementation of the government's favorable policies" take effect. It said the "international market has showed signs of hitting the bottom."

Honeywell Aerospace (SGC) was selected by Hainan Airlines (HNA) to provide 131-9A Auxilliary Power Units (APU)s for 13 A320s, with deliveries scheduled for 2010 to 2012. The contract is valued at more than >$11 million and covers maintenance through 2022.

737-84P (35751, B-5478), delivery.

October 2009: Hainan Airlines (HNA) posted a +CNY175.5 million/+$26.3 million third-quarter profit, reversed from a -CNY260.8 million deficit in the year-ago quarter, as operating revenue soared +34.2% to CNY4.57 billion. Like other Chinese airlines, it credited a recovery in the domestic market and favorable financial policies from Beijing for the improved performance. (HYNA)'s third-quarter expenses climbed +18.7% year-over-year to CNY3.65 billion. Nine-month profit of +CNY350.5 million compared to a +CNY50.2 million surplus in the year-ago period.

(HNA) received USA Department of Transportation approval to operate flights between Beijing and Hawaii, Honolulu's "Star Bulletin" reported, adding that Hawaiian tourism officials believe service could begin before year end. (HNA) reportedly will use A340s to operate once-weekly flights, with the service eventually upped to thrice-weekly.

(HNA) is also contesting some niche international markets like St
Petersburg, Berlin, Brussels, Budapest, Seattle, Luanda, Khartoum, and Honolulu, all from Beijing. A new Haikou - Hanoi route, meanwhile, signals its interest in the (ASEAN) market. Nevertheless, like all Chinese airlines, most of (HNA)’s capacity is in the extremely competitive domestic market, where yields are under pressure.

737-84P (35753, B-5479) and A319-132 (3842, B-6401), deliveries. The A319 to be wet-leased to Deer Air (DER).

November 2009: Hainan Airlines (HNA) parent, the (HNA) Group launched a business jet subsidiary in Shanghai in an attempt to tap the increasing potential of the high-end business (C) and general aviation market. Deer Business Jet Company has registered capital of CNY300 million/$43.9 million, with (HNA) subsidiaries, Deer Air (DER) and Yangtze River Express (YTH) the main stakeholders. The ownership structure has not been made public. It initially will operate two Hawker 800s. China currently has no more than 30 business jets, but it is estimated the country will need 600 to 1,200 over the next 10 years.

737-84P (36780, B-5462), and A319-132 (3914, B-6402), deliveries. The A319 to be wet-leased to Deer Air (DER).

December 2009: Hainan Airlines (HNA) will increase its thrice-weekly, Beijing - Brussels A330-200 service to daily on April 27.

2 A319-132s (3842, B-6401; 3914, B-6402), deliveries.

February 2010: Hainan Airlines (HNA) parent, the (HNA) Group is expected to launch a new Beijing-based carrier called "Capital Air" in partnership with the city government. Capital Air will be based on the assets of (HNA)'s Deer Air (DER) subsidiary, which operates 18 A319s primarily on charter services. (DER) transported 2.6 million passengers last year and has registered capital of CNY776.5 million. Beijing Capital Tourism Company will represent the city government, although the amount of its investment remains under discussion. (HNA) will be the controlling stakeholder. It is unclear whether Capital Air will focus on charters or scheduled services.

The airline/local government partnership is a growing trend in the Chinese industry. (HNA) subsidiary, Lucky Air (LKY) received a +CNY290 million/+$42.4 million capital injection from the Yunnan provincial government last June; China Eastern Airlines (CEA) sold a 35% stake in its Yunnan branch company to the Yunnan provincial government in May; and Shenzhen Airlines (SHZ) is preparing to launch "Ningxia Airlines" with the government of the autonomous region in north central China. Analysts have said that one key driver of the trend is the favorable regulatory treatment afforded those airlines that align with local government, as well as the investment capital.

(HNA) chose the Rockwell Collins MultiScan system and sensors for 13 of its A330s. Deliveries will begin this year. Continuing its order, it selected the ADF-900, DME-900, HFS-900D HSD Radio, CPL-920D Coupling Unit, VOR-900 Marker Beacon Receiver and VHF-2100 VHF Transceiver.

Honeywell (SGC) will provide an avionics suite for Hainan Airlines (HNA)'s 13 A320 deliveries beginning in 2010 with options for 30 more. The package includes the (ADIRU), (ACAS), (CVR) and (FDR), (EGPWS) and Air Traffic Services Unit with Airline Operational Communication software.

Pemco World Air Services is converting 6 (HNA) 737-300 passenger airplanes to freighters. Two airplanes already have been redelivered to parent, the (HNA) Group, with the 3rd scheduled for next month and the remaining 3 set to enter service before July.

2 737-84Ps (35757, B-5502; 36782, B-5503), deliveries.

April 2010: Hainan Airlines (HNA) reported net income of +CNY334.7 million/+$49.1 million for 2009, a big turnaround from a net loss of -CNY1.41 billion in 2008, citing gains from the government's return of the civil aviation fund and real estate investments.

Operating revenue climbed +14.7% to CNY15.55 billion, while operating expenses rose +6% to 13.26 billion. Passenger boardings jumped +21.2% to 17.4 million with average load factor decreasing -0.5 point to 78% LF. Cargo volume increased +26.5% to 236,000 tonnes.

(HNA) introduced 26 airplanes last year comprising one 737-300, 22 737-800s, one A330 and two A340s, while phasing out 12 airplanes. Its total fleet numbered 91 on December 31.

It said it plans to take advantage of the "strong market rebound with global economic recovery" this year and will benefit from Beijing's plan to make Hainan Island an international tourism destination. But it warned that "challenges still remain," including "high fuel prices and interest rates" and the negative impact of domestic high-speed rail. It has cancelled some domestic routes owing to rail competition. It forecasts transporting 19.4 million passengers in 2010, a +11% increase over 2009. It projects that cargo volume will lift +8.2% to 255,300 tonnes.

(HNA) posted first-quarter net income of +CNY252.5 million/+$37 million, a more-than-sevenfold increase over a +CNY31.8 million profit in the year-ago period. Operating revenue rose +36.4% to CNY4.7 billion against a +30.9% lift in expenses to CNY3.5 billion. (HNA) credited "domestic market recovery" and its effective "fleet expansion" for the positive performance.

May 2010: 737-84P (36781, B-5522), delivery.

June 2010: (HNA) Group Company Limited of China, a leading investor in global aviation, shipping and logistics, and Bravia Capital Partners (Bravia), announced their plans for the next phase of growth following their recent acquisition of a 33.33% shareholding in (GTB) Invest (ASA) (GTB), the listed Norwegian offshore services company. The investment is held by Oceanus International Investment AS. Oceanus is owned 90% by (HNA) and 10% by an affiliate of Bravia and Oceanus is (GTB)'s largest shareholder.

Following an Extraordinary General Meeting of (GTB) on June 10, (GTB) now has a rejuvenated Board of Directors and management team and steps have already been taken to adopt an outline Business Plan to transition the company into a ship owning/ship financing entity.

Mr Adam Tan, Executive Director, the (HNA) Group said: "(HNA) is very committed to growing its presence in the global shipping industry. Our investment in (GTB) provides us with an opportunity and platform to help deliver on this by accessing the knowledge and expertise available in Norway and combine its world class sector skills with our rapidly growing interests in China".

"I am delighted to announce that (GTB) shareholders have elected a new Board to be chaired by Stewart Smith, who is currently Vice Chairman of the (HNA) Group (Hong Kong) Company Limited, (HNA)'s international holding company. Other members of the Board include Svein Eggen, Anne Oian, Mari Thjomoe, Rebekka Glasser Herlofsen, Wen Jiang, and Liu Liang. All members of the new Board hold senior management and/or Board positions in major transport, finance and industrial companies."

"The new Board will work closely with a new management team to put in place a long-term business strategy to position (GTB) for growth and expansion in shipping. With this in mind, the Board has appointed Jan Hakon Pettersen as CEO, and Garup Meidell as Deputy (CEO). Both are very experienced with strong reputations and the necessary expertise to build (GTB) into a leader in the global ship financing/leasing marketplace," he added.

Mr Bharat Bhise, (CEO), Bravia Capital Partners, said: "The renewed focus for (GTB) is very positive for all shareholders. The plans are a reflection of (HNA)'s commitment to the Asia-Pacific and European markets, and the investment in (GTB) will provide the opportunity for (HNA) to build on its position as a major investor and participant in the world shipping business."

"This is another exciting development in (HNA)'s international investment strategy, following its acquisition of the airplane leasing assets and business of Allco Aviation earlier this year, since rebranded as Hong Kong Aviation Capital. We are already seeing positive outcomes from that investment and we look forward to the further development and expansion of (GTB) in the future." (GTB) has a full listing on the Oslo Stock Exchange, with 3,500 shareholders.

737-84P (35766, B-5521), delivery.

July 2010: Based on the island of Hainan, Hainan Airlines (HNA) is China's largest privately owned airline operating a scheduled domestic and international network of routes from its Haikou hub and headquarters on the island of Hainan and nine locations on the mainland. The expanding international network serves destinations in around a dozen countries and charter flights from Haikou also serve Busan, Kuala Lumpur, Seoul, and Singapore.

Employees = 10,027.

(IATA) Code: HU - 880. (ICAO) Code: CHH (Callsign - HAINAN).

Parent organization/shareholders: Grand China Air Holding (51.68%); American Aviation (foreign shareholder of unlisted share) (14.8%); (HNA) Qixing Industrial Investment (6.83%); Hainan Jincheng State Property Administration (2.37%); Bank of Communications, Hainan Branch (0.89%); China International Travel Agency (0.89%); Naito Securities (0.45%); Beijing Tianye Commerce and Trade (0.44%); China Industrial Trust & Investment, Hainan Office (0.44%); & China Education, Science & Tech Trust & Investment (0.41%); and others (20.8%).

Airline subsidiaries/shareholdings: Chang An Airlines (CGN) (81.16%); China Xinhua Airlines (XIH) (60%); Yangtze River Express (YTH) (51%); Lucky Air (LKY) (48.9%); Deer Jet (DER) (5%); Tianjin Airlines (1.47%); and ShanXi Airlines (CHG) (96.97%).

Alliances: Air Berlin (BER); BHrussels Airlines (DAT)/(EBA); Japan Airlines Domestic (JAA); Japan Airlines International (JAL); and Malev (HGA).

Main Base: Haikou Meilan International airport (HAK).

Hubs: Xi'An-Xianyang International airport (XIY); & Ningbo airport (NGB).

Domestic, Scheduled Destinations: Baotou; Beijing; Changchun; Changsha; Changde; Changsha; Changzhi; Chengdu; Chifeng; Chongqing; Dalian; Datong; Dongying; Dunhuang; Enshi; Fuzhou; Guangzhou; Guiling; Guiyang; Haikou; Hailar; Hangzhou; Hanzhong; Harbin; Hefei; Hohhot; Jiamusi; Jinan; Jingdezhen; Kashi; Kunming; Lanzhou; Manzhouli; Nanchang; Nanking; Nanning; Ningbo; Qingdao; Qingyang; Qiqihar; Sanya; Shanghai; Shantou; Shenyang; Shenzhen; Shijiazhuang; Taiyuan; Tianjin; Tongloao; Ulanhot; Urumqi; Weifang; Weihai; Wenzhou; Wu Hai; Wuhan; Xi'An; Xiamen; Xining; Xuzhou; Yan'an;
Yancheng; Yichang; Yinchuan; Yulin; Zhanjiang; & Zhengzhou.

International, scheduled destinations: Bangkok; Budapest; Hong Kong; Kula Lumpur; Osaka; Seoul; & Tokyo.

Aviation Partners Boeing (APB) announced orders from Hainan Airlines (HNA) who has committed to install winglets on all future 737-800 deliveries (it currently has 45 on order).

August 2010: Hainan Airlines (HNA) will start flying 2x-weekly from Dalian in the northeastern province of Liaoning to Singapore from August 29. The route, with a stopover in Hefei in Anhui province, mideastern China, will be operated with 737-800s. In the first 6 months, passenger traffic between China and Singapore reached 1.7 million, more than >20% higher than a year ago. Hainan Airlines (HNA), based in Haikou in Hainan province, will be the 6th Chinese carrier to serve Singapore.

China Southern (GUN) will more than double the size of its operation in Hainan, the home province of rival Hainan Airlines (HNA) over the coming 5 years, taking advantage of subsidies offered by the local government. (GUN) says it will deploy airplanes worth >10 billion yuan/$1.5 billion to the island province, aiming to promote it as an international tourism destination. The fleet of its Hainan branch company will rise to 50 airplanes from 22 within five years, implying +22% annual growth (much faster than can be expected in the overall Chinese airline market in that time). The number of routes serviced from Hainan will rise correspondingly to 93 from 42.

Hainan’s provincial government will support the investment with tax concessions and land, among other forms of assistance. Chinese provincial and municipal governments commonly offer such inducements for companies to set up or expand businesses that will help drive their local economies. In this case, Hainan is doing so despite its investment in Hainan Airlines (HNA).

Although China Southern (GUN) does not mention the issue, exploitation of Hainan as a destination also helps to address one of (GUN)’s most pressing concerns: how to develop its international business to offset massive competitive pressure from China’s rapidly developing network of fast railways.

(GUN) Chairman, Si Xianmin said (GUN) will open express services from Hainan to Hong Kong and Guangzhou and international services to Russia, South Korea, and Japan. Si had previously said (GUN) must respond to the rail threat by increasing international services to 30% of its operations from the current 17%. Of the 93 routes expected to be added, 26 will be international.

(GUN) said it will increase its share of the Hainan market to 40% by 2015 from 33. It currently operates 22 airplanes from Hainan to 42 destinations.

September 2010: Hainan Airlines (HNA) reported net income of +CNY557 million/+$82 million for the 6 months ended June 30, more than tripling a +CNY175 million profit posted in the year-ago period, on a +42.3% lift in operating revenue to CNY9.6 billion. Operating expenses increased +35.2% to CNY7.4 billion.

(HNA) attributed the improved performance to "strong growth of domestic market demand" stimulated by robust Chinese economic growth. Passenger boardings rose +12.6% to 9.2 million with an average load factor of 81% LF, up +4.1 points. Cargo volume climbed +38.7% to 135,200 tonnes.

As of June 30, Hainan (HNA)'s fleet totaled 91 airplanes comprising four 737-300s, nine 737-400s, 65 737-800s, three 767-300s, two A319s, five A330-200s and three A340-600s. It phased out one 737-300 and two A319s.

2 737-84Ps (35761, B-5540; 37425, B-5552), deliveries and A330-223 (1034, B-6521), Hong Kong Airlines (CRY) leased.

November 2010: Hainan Airlines (HNA) is negotiating with the Shanghai municipal government to seek a capital injection for its Shanghai Deer Air (DER) subsidiary as it looks to expand its business jet fleet.

Shanghai Deer Air (DER) was launched at the end of 2009 in its namesake city with a registered capital of nearly CNY1 billion/$150 million. (HNA)’s subsidiaries, the (HNA) Tourism Company, Grand China Logistics and Yangtze River Express Airlines (YTH) are all stakeholders.

Currently, Shanghai Deer Air (DER) operates two Hawker 800s and plans to expand its fleet to 20 business jets by the end of the year to further explore the Shanghai business aviation market, which is predicted to record +10 to +15% annual growth in the years ahead.

But Shanghai Deer Air (DER) is expected to face fierce competition from Shanghai-based China Eastern Airlines (CEA), which operates one Hawker 800 and plans to expand its business jet fleet to five to seven in the coming days.

It is not the first time (HNA) has sought financial support from the local government — its subsidiary, Capital Air received a capital injection of CNY450 million from the Beijing municipal government in May by selling its 30% stakes to the latter. Currently, Capital Air operates a fleet of 25 Airbus (EDS) airplanes and 24 business jets and grabs more than >90% share of the domestic business aviation market. Air China (BEJ) plans to launch a new Beijing-based business jet company in conjunction with the Beijing municipal government to compete against Capital (DER).

(COMAC) (CCC) announced at the China International Aviation and Aerospace Exhibition in Zhuhai that four Chinese airlines and two leasing companies have placed orders and commitments for up to 100 C919s. The airlines comprise Air China (BEJ), China Southern Airlines (GUN), China Eastern Airlines (CEA), Hainan Airlines (HNA); the lessors are (GE) Capital Aviation Services (GECAS) (GEF) and the China Development Bank Leasing Company.

The orders, the first for the 150 to 170 seat transport, also mark the formal launch of (CFM) International's (LEAP-X1C), which was selected as the exclusive western powerplant for the airplane last year.

(COMAC) (CCC) Chairman, Zhang Qingwei noted “the big order['s] would lay a solid marketing base for the smooth development of C919 production,” which is scheduled to make its first flight in 2014 and enter service in 2016. "We are obviously honored by the strong show of support from China's major airlines evidenced by these launch orders," said (CFMI) President & (CEO), Eric Bachelet. (CFM) said it is on schedule to freeze the (LEAP-X) design by the end of 2011 with the first full (LEAP-X) engine going to test in early 2013.

(CEA) Chairman, Liu Shaoyong said (CEA) would take 20 C919s. It is reported that each of the other three airlines are taking a similar number, while (CDB) Leasing Company has reportedly ordered 10.

(GE) Aviation (GEC) and China's (HNA) Group, parent of Hainan Airlines (HNA), signed a Memo of Understanding (MOU) at the Zhuhai Air Show to form a Maintenance Repair & Overhaul (MRO) joint venture (JV) for (GE)'s (CF34-10A) and (CF-34-10E) engines for the ARJ-21 and Embraer E190/E195 regional jets, respectively. The facility will be located in Tianjin province and operated by the (HNA) Group "with technical support and materials from (GE)," (GEC) said.

January 2011: Hainan Airlines (HNA) operates with lower costs and is generally considered more dynamic than China's central government-controlled Big Three: Air China (BEJ); China Eastern Airlines (CEA), and China Southern Airlines (GUN). That helps (HNA) to outperform its larger rivals in most quarters, especially ever since it built a comprehensive domestic network. But it’s often at the mercy of bureaucrats at the Civil Aviation Administration of China (CAAC) (CAC), lacks a meaningful presence in Shanghai and operates an unimpressive international network featuring smallish markets served from scattered bases. Even in Beijing, its largest international gateway, it lacks an alliance partner and operates domestic feed from a separate terminal.

2 737-790s (30662, B-5268; 30663, B-6529), (ILF) leased for Lucky Air (LKY) operations. A320-232 (4569), delivery for West Air operations. A320-232 (4580) for Hainan Airlines (HNA). 2 A330-343Es (1178, B-6527; 1190, B-6529), deliveries.

February 2011: Hainan Airlines (HNA) said it expects to report 2010 net income of more than >+CNY2.01 billion/+$306 million, a sixfold increase over a +CNY335 million net profit reported for 2009. (HNA) credited "rapid growth of market demand stimulated by the global economic recovery and robust domestic economic growth," favorable government policy that aims to build Hainan as a vacation destination and increase operating efficiency.

Owing in large part to surging domestic growth, Chinese carriers earned a collective net profit of +CNY35.1 billion/+$5.28 billion in 2010, according to the (CAAC) (CAC).

Hainan Airlines (HNA) signed a strategic cooperation agreement with China Telecom Company to develop in-flight mobile phone and Internet service aboard (HNA)'s airplanes, pending the (CAAC)'s approval.
If approved, (HNA) would become the first Chinese carrier to offer in-flight voice and Internet services. Shenzhen Airlines (SHZ) tried to get approval for a similar agreement with Swiss OnAir Company in September 2007 but the (CAAC) rejected the deal.

March 2011: Hainan Airlines (HNA) earned net income of +CNY3.01 billion/+$458 million in 2010, a big reversal from a net loss of -CNY1.41 billion in 2009.

Operating revenue climbed +39.6% compared to 2009 to CNY21.71 billion, while operating expenses increased +16.9% to CNY15.49 billion. (HYNA) said the improved result was driven by "strong market demand," particularly in the domestic market.

Passenger boardings for the full year rose +6.9% to 18.63 million with average load factor at 81.7% LF, up +3.7 points over 2009. Cargo traffic volume increased +19.7% to 282,500 tonnes.

(HNA) added 12 airplanes to its fleet in 2010 comprising 9 737-800s and 3 A330s. It also phased out 6 airplanes.

It operated a total fleet of 97 airplanes as of December 31, 2010, including 3 737-300s, 9 737-400s, 71 737-800s, 1 A330-300, 7 A330-200s, 3 A340-600s and 3 767-300s.

(HNA) said further expansion is likely in 2011, pointing to "continuous growth of market demand, acceleration of the building of Hainan as an international tourism island, possible yuan appreciation and infrastructure construction." It plans to take delivery of 10 airplanes this year comprising 7 737-800s, 2 A330s and 1 787-8.

On the negative side, (HNA) warned that rising fuel prices and interest rates and high speed rail construction pose challenges.

March 2011: CHAMP Cargosystems was selected by the (HNA) Group to supply a full suite of Cargo Information Technology (IT) services to be deployed at Hong Kong Airlines (CRY) and Hong Kong Express (HKE).

April 2011: Hainan Airlines (HNA) selected Aviareps to serve as its General Sales Agent (GSA) in Switzerland.

737-84P (39223, B-5579), delivery.

May 2011: Hainan Airlines (HNA) reported net income of +CNY273.3 million/+$41.9 million in the first quarter, up +8.2% over a +CNY252.5 million profit in the year-ago period, owing to the rapid growth of Chinese domestic market demand and revenue generated by fleet expansion, according to a Shanghai Stock Exchange filing.

Operating revenue climbed +23.1% to CNY5.76 billion, while operating expenses jumped +21.5% to CNY4.31 billion. (HNA) didn't disclose first-quarter passenger figures. Load factor improved +1.5 points to 82.9% LF. Cargo traffic volume decreased -3.8% to 62,000 tonnes.

Chinese carriers are expected to continue reporting first quarter profits given that they posted collective first-quarter net income of +CNY5.73 billion.

Hainan Airlines (HNA) relaunched Chongqing-based, China West Air (CHO) in conjunction with Chongqing Yufu Capital Management Company, which is controlled by the Chongqing municipal government. (HNA) didn’t reveal the exact figure but noted the combined investment was CNY3 billion/$460.8 million.

China West Air (CHO) was initially launched in 2006 with a registered capital of CNY80 million. (HNA) subsidiary Lucky Air (LKY) and Jianying Investment Company both hold a 35% stake and Shenzhen Guorui Investment Company, Sichuan Sanxing General Aviation Company and Xinjiang Siweida Technology Company all have a 10% stake in (CHO).

China West Air (CHO) operates a total fleet of nine airplanes, comprising four A319s, two 737-300s and three A320s on more than 20 domestic routes. (CHO) is expected to open international routes to Southeast Asia, Japan and South Korea by the end of 2012 and expand its fleet to 40 by 2015.

It is noteworthy that China Southern Airlines (GUN), which launched subsidiary Chongqing Airlines (CGQ) in 2006, signed a cooperation agreement this month with the Chongqing municipal government to enhance its position in Chongqing.

June 2011: Hong Kong Airlines (CRY) signed orders for 15 747-8I passenger jets at the Paris Air Show.

China's (HNA) Group has ordered 38 Boeing passenger airplanes for its unit Hong Kong Airlines (CRY). The Memorandum of Understanding with Boeing (TBC) comprises 30 787-9s, 6 777F Freighters, and 2 787-8s in (VIP) configuration, said (HNA).

"We have been waiting for the 787 for a long while, and we are very happy to finally order this airplane," said Adam Tan, a director of the (HNA) Group and Chairman of (HNA) Industrial Holding.

He added that the group, which also owns Hainan Airlines (HNA), China's 4th largest carrier and biggest privately owned airline, hopes to develop Hong Kong Airlines (CRY) into a much bigger player in its market, where it competes with the island's flag carrier Cathay Pacific (CAT).

"There are plenty of routes that are not served and we think that we can grow those. We also believe that there is growing demand for Hong Kong as a hub, and Hong Kong Airlines (CRY) will be able to contribute to that," said Tan.

Hainan Airlines (HNA), he added, could eventually take some of the 787s that the Group has ordered if there is demand for the airplane type. "This order is intended for Hong Kong and the airplanes will be based here, but they could be operated by Hainan Airlines (HNA) if we can work that out," he said. Hainan Airlines (HNA), he added, would continue to grow despite the competition from the 3 government-owned majors, Air China (BEJ), China Southern Airlines (GUN) and China Eastern Airlines (CEA). "We are looking to add to our market share. It is not about taking market from those 3 but also about creating a new market and growing with the higher demand in China, he said.

Hainan Airlines (HNA) appointed the (ECS) Group to serve as its General Sales Agent (GSA) in Switzerland.

July 2011: The Hainan Airlines (HNA) Group is considering investing in financially troubled Malev Hungarian Airlines (HGA), according to an industry insider in China who said (HNA) is in negotiations with (HGA). If successful, (HNA) would become the 1st Chinese carrier to invest in a European airline.

(HNA) signed a Letter of Intent (LOI) with (HGA) to deepen its cooperation and sent a group to negotiate with (HGA). "(HNA) is in talks with (HGA) now mainly owing to the promotion [of cooperation between the carriers] by the Hungarian government and the Chinese government," said the source, who pointed out that it may take "at least 4 to 5 months" to clear all hurdles to complete a deal.

Interestingly, (HNA) Chairman, Chen Feng noted that (HNA) considered making a bid for (HGA) in 2004. Ultimately, (HNA) decided against the investment because (HNA) lacked a broad route network in Europe and it considered the financial risk too great. Meanwhile, Chen revealed that (HNA) is interested in a stake in Germany's Hochtief Airport.

Later, the Hainan Airlines (HNA) Group sealed a deal to invest in Istanbul-based cargo carrier, (ACT) Airlines (ACC). (HNA), which has made clear that it wants to invest abroad, didn't reveal how much money it will put into (ACT) or how large its holding will be.

(ACT) (ACC) was launched in 2004 and operates a fleet of 4 A300B4F freighters. Its fleet is expected to expand to 10 aircrat in the next 2 years, aided in part by the (HNA) investment.

In October 2010, (HNA) invested in the Turkish Maintenance Repair & Overhaul (MRO) company myTECHNIC and has said it plans to increase its stake.

The 800th A330 has been received by Aircastle (CSL) for operation by the (HNA) Group. This is the third A330-200F for its fleet. To date, >1,140 A330s have been ordered.

September 2011: Hainan Airlines (HNA) reported a 1st-half net profit of +CNY669.52 million/+$104.7 million, up +20.2% compared to net income of +CNY556.83 million in the year-ago period, owing to “robust growth of domestic market demand.”

Operating revenue jumped +19.6% to CNY11.56 billion, while operating expenses rose +18.1% to CNY8.74 billion. Passenger boardings rose +4.3% to 9.6 million, with an average load factor of 83.7% LF, up +2.5 points year-over-year. Cargo traffic volume decreased -2.3% to 132,100 tonnes. Average airplane utilization rate reduced -10.9% to 9.46 hrs.

As of June 30, (HNA) operated a total fleet of 105 airplanes, comprising 6 737-300s, 9 737-400s, 72 737-800s, 3 A330-300s, 7 A330-200s, 3 A340-600s, 3 767-300s and 3 737-700s.

(HNA) announced its 3 subsidiaries also earned healthy 1st-half profits. China Xinhua Airlines (XIH) earned a net profit of +197.9 million, Chang’an Airlines (CGN) posted a net income of +51.1 million and Shanxi Airlines (CHG) reported a net profit of +27.4 million.

October 2011: Hong Kong-based Bravia Capital and Haikou-based (HNA) Group, parent of Hainan Airlines (HNA), said they have acquired Istanbul-based, all-cargo carrier, (ACT) Airlines (ACC).

(HNA) revealed earlier this year that it would invest in (ACT) (ACC). "The transaction represents the strategic expansion of China's global footprint into the high-growth marketplace of Turkey and surrounding regions," Bravia and (HNA) said in a joint statement.

The companies added that (ACT) Airlines "has been rebranded and will trade as MyCargo Airlines (ACC)." (HNA) said (ACC) will operate under its Grand China Logistics Group.

(HNA) General Manager Cargo, Zhang Youqiang, who was appointed the new Chairman of MyCargo (ACC), said that Turkey and the surrounding "region is a strategic focus for (HNA), and we hope to utilize our investments to develop a full-service logistics hub for the surrounding growth regions. (HNA)'s flagship airline, Hainan Airlines (HNA), has already begun passenger service to Istanbul, and we intend to expand our product offering in developing air cargo, shipping and tourism businesses in the area."

Yavuz Cizmeci, who had been part of (ACT) (ACC)'s previous ownership, was described by Bravia/(HNA) as MyCargo (ACC)'s (CEO). He said, "We are in discussions to expand our business severalfold and we have already increased fleet capacity in order to meet the growing demand. In addition, we have several large-scale initiatives planned to develop operating platforms in Europe and Africa."

(ACT)/MyCargo (ACC) currently operates 6 A300-200F freighters and counts (DHL) and Lufthansa (DLH) as customers. Bravia/(HNA) said they will deliver 2 747-400F freighters to MyCargo (ACC) to be put into service this year. "Bravia and (HNA) have [also] committed to source and deliver up to 10 A300-600F freighters and 3 additional 747-400F freighters over the next 2 years," the companies said.

737-84P (38146, B-5625), delivery.

November 2011: Hainan Airlines (HNA) reported a 3rd-quarter profit increase owing to the continuous robust growth of domestic market demand. (HNA) reported a 3rd-quarter net profit of +CNY1.61 billion, up +31.3% over a net income of +CNY1.22 billion compared to the year-ago quarter. Operating revenue climbed +28.3% to CNY7.8 billion against an increase of +27.1% in operating expenses to CNY4.9 billion.

In the 1st 9 months of the year, (HNA) reported a net profit of +CNY2.28 billion. (HNA)’s operating revenue climbed +23% to CNY19.37 billion, while operating expenses increased +20.6% to CNY13.642 billion.

2 A330-243s (1286, B-LNK; 1322, B-LNL), ex-(F-WWTI), sub-leased from Hong Kong Airlines (CRY).

December 2011: American Airlines (AAL) and Hainan Airlines (HNA) have reached a code share agreement under which (AAL) will place its code on (HNA) Beijing - Seattle service and (HNA) will place its code on (AAL) Shanghai service from Chicago and Los Angeles.

The Hainan Airlines Investment Holding Company, a wholly owned subsidiary of Hainan Airlines (HNA), has purchased a 19.02% stake in Hong Kong Airlines (CRY) for 842 million yuan/$132.4 million in a deal that will strengthen (CRY)'s financial position as it aggressively expands its network in the face of growing competition.

The deal, which values Hong Kong Airlines (CRY) at HK$3.59 billion/$461.2 million, comes after (CRY), Hong Kong's 3rd-largest carrier (after Cathay Pacific (CAT) and DragonAir (DRG)) said in November it was considering delaying its planned $200 million - $300 million Hong Kong initial public offering (IPO) due to the global economic downturn.

January 2012: Hainan Airlines (HNA) has reduced the price of its additional share offerings from CNY6.42 per share in the Shanghai Stock Exchange to CNY4.84 per share to raise CNY8 billion/$1.28 billion to pay off a bank loan of CNY6.08 billion and increase its cash flow.

The debt resulted from the rapid business expansion of its overseas merger and acquisitions (M&A) activities. (HNA)’s bank debt has increased from CNY9 billion in 2008 to CNY 14.8 billion at the end of the 2011 third quarter.

(HNA) has slowed down its expansion pace because of the global economic downturn and its heavy financial burden. (HNA) Chairman, Chen Feng said (HNA) would cut unnecessary investments to reduce operating expenses. As a result, (HNA), which was considering investing in financially troubled Malev Hungarian Airlines (HGA), has suspended negotiations.

737-36N (28602, B-2113), returned from China West Air, and 2 737-84Ps (38149, B-5636; 39195, B-5711), deliveries.

February 2012: American Airlines (AAL) has USA Department of Transportation approval for a reciprocal code share agreement with Hainan Airlines (HNA). (HNA) will now use the (AA) code on its USA - China service (currently Seattle - Beijing) and on service within China. (AAL) can now display the (HU) code on its flights between the USA and China (currently Chicago - Beijing, Chicago - Shanghai and Los Angeles - Shanghai) and on flights within the USA beyond Seattle.

The Chinese government has raised domestic jet fuel prices to CNY7,465/$1,186 per ton, up +1.43% from CNY7,360 per ton in January, dealing another blow to Chinese carriers that have already suffered from a decline in domestic market demand and air fares following the Chinese Spring Festival.

This is the first fuel price hike this year. In January, the Chinese government cut domestic jet fuel prices by -3.83%. Since July 2011, Beijing has made monthly adjustments to domestic fuel prices based on fluctuating international fuel prices.

Fuel costs comprise more than >40% of Chinese carriers’ operating expenses. China Southern Airlines (GUN), which operates 80% of its flights on domestic routes, could see its fuel costs increase by +CNY273 million annually. Air China (BEJ) and China Eastern Airlines (CEA), which operate 70% of their flights on domestic routes, could see their annual fuel costs rise by +CNY234 million and +CNY242 million, respectively.

Despite the increase of domestic fuel price, Chinese airlines cannot raise fuel surcharges to offset rising fuel costs.

China has prohibited its airlines from participating in the (EU) Emission Trading Scheme (EU ETS), escalating the row over the new and controversial carbon emissions tax. According to a "Reuters" report, the Chinese government’s State Council issued a statement on its website that said Chinese carriers were prohibited from participating in (EU ETS) without government approval, and they were also barred from using (ETS) as a reason to raise fares.

The Association of Asia-Pacific Airlines (AAPA) Director General, Andrew Herdman told "Reuters" the ruling put Chinese carriers in a difficult position because they have to comply with (EU ETS), or risk large fines, while also being told by their government that they must not comply. “We’re now at the stage that it’s absolutely clear that a whole host of foreign governments are not going to allow the (EU) to do this,” Herdman said.

Chinese carriers are supporting Beijing’s decision to prohibit its airlines from participating in the European Union Emissions Trading Scheme (EU ETS), while still reserving the right to file a lawsuit.

“We are quite supportive of our central government’s decision and we think the real solution should be a global approach through [ICAO],” China Eastern Airlines (MU) Chairman, Liu Shaoyong said. He emphasized that domestic carriers are reserving the right to file a lawsuit against the (EU ETS).

China Air Transport Association (CATA) Director General, Wei Zhenzhong said that “Beijing’s decision reflects Chinese carriers’ wishes and also is quite helpful to protect the real interest of domestic airlines and air travelers.” (CATA) estimates operating expenses of Chinese carriers will increase by +CNY800 million/+$127.2 million annually because of (EU ETS). Air China (BEJ), which operates the most European routes, is expected to see the largest rise in expenses (+CNY200 million). (CEA) is expected to follow at +CNY100 million.

Expenses associated with the (EU ETS) are predicted to keep rising as Chinese carriers open more international routes to Europe to compete with the high speed rail. This year, (BEJ) is scheduled to launch service from Shanghai - Paris and China Southern Airlines (GUN) plans to open a Guangzhou - London route.

Wei said that Beijing’s decision was just the first step in the escalating row over the new controversial carbon emissions tax, as Chinese carriers will most likely be suspended from flying to Europe, a consequence of “not joining (EU ETS).” As a result, the Chinese government is considering counter measures against the (EU ETS) with Russia, India, Brazil, and other countries.

March 2012: Hainan Airlines (HNA) may order 747-8s airplanes, citing repeated delivery delays of the 787. However, (HNA) confirmed it has no plans to cancel its order for 10 787s. It denied news reports that it may swap out its 787 order for the 747-8s.

“We are indeed considering ordering [the] 747-8 now as the continuous delivery delays of [the] 787 have affected our operation. But we won’t cancel our 787 orders,” (HNA) said.

According to the original schedule, (HNA) should have taken delivery of its first 787 Dreamliner in December and introduced +5 more this year.

When asked about the delivery delay, a Boeing (TBC) spokesperson said “We are working diligently to deliver these airplanes to our customers.”

Last October, China Eastern Airlines (CEA) canceled an order for 24 787s, replacing it with an order for 45 737s, citing delivery delays and a weakening economy. China Southern Airlines (GUN) and Air China (BEJ), the nation's other two big carriers, still hold 787 Dreamliner orders. (GUN) is expected to be the first Chinese carrier to receive the 787 but the delivery date has been postponed to July, 4 years after it was 1st promised.

The 787 entered service October 26, 2011 (>3 years late due to production delays) when launch customer All Nippon Airways (ANA) flight NH7871 took off from Tokyo Narita bound for Hong Kong.

April 2012: Hainan Airlines (HNA) reported a net profit of +CNY2.63 billion/+$415.9 million in 2011, down -12.7% compared to +CNY3.01 billion in 2010, due to high fuel prices.

Operating revenue climbed +21% to CNY 26.27 billion, while expenses jumped +26% to CNY19.5 million.

Passenger boardings rose +9.98% to 20.49 million with an average load factor of 84.2% LF, up +3.01 points over the prior year. Cargo traffic volume grew +3.36% to 292,000 tonnes.

In 2011, (HNA) took delivery of 14 airplanes and phased out three airplanes. (HNA) operated 108 airplanes, comprising 6 737-300s, 8 737-400s, 3 737-700s, 75 737-800s, 3 767-300s, 6 A330-200s, 4 A330-300s and 3 A340-600s.

Looking ahead, (HNA) said it expects to take advantage of the Chinese economy’s stable growth and yuan appreciation, as well as “more favorable policies for the domestic airline industry” and Beijing’s strategy of “building Hainan as international tourism island.”

The company warned that increasing fuel expenses, rising interest rates, continuing construction of the high speed rail and growing market competition remains challenging.

(HNA) Chairman, Chen Feng said it is considering transforming its subsidiary, Hong Kong Express Airways (HKE), into a low-cost carrier (LCC), since barriers have been removed for domestic carriers to enter the (LCC) market. China Eastern Airlines (CEA) and the Qantas (QAN) Group are planning to launch a (LCC), Jetstar Hong Kong, in 2013.

May 2012: Hainan Airlines (HNA) now flies from Taiyuan via Haikou Meilan Airport on the island of Hainan to Singapore Changi Airport.

June 2012: "Discover the World Marketing" was selected by Hainan Airlines (HNA) to serve as its sales and marketing agent in Greece and Cyprus.

July 2012: On July 13, Hainan Airlines (HNA) increased its offering to Thailand as it launched 4 weekly services between the capitals of China and Thailand; Beijing (PEK) and Bangkok (BKK). (HNA) already serves the Thai capital from Hangzhou and Nanning. Flights on the new 3,300 km route are operated with 737-800s. (HNA) will face competition from Thai Airways (TII) (11x-weekly frequencies), Air China (BEJ) and SriLankan Airlines (LNK) (each daily flights). Bangkok is the second Thai destination after Phuket to be offered by Hainan Airlines (HNA) from Beijing.

Hainan Airlines (HNA) will launch a joint venture (JV) with Ghana’s Africa World Airlines (AWA), a regional carrier scheduled to start operations with 2 Embraer ERJ-145s at the end of the year.

(HNA) signed a cooperative agreement with the China-Africa Development Fund, Ghana (SA)S Financial Group and Ghana Social Security and National Insurance Trust to invest in (AWA).

(HNA), which would be the controlling stakeholder of the new entity, did not give details on its investment and ownership structure.

(HNA) said that “big market demand for air transport industry in Ghana and other parts of West Africa triggered by the backwardness of ground traffic” is the main reason it decided to launch (AWA). But industry analysts also pointed out that “instability of political situation and harsh natural environment in Africa” would present some challenges for the successful operation of the new (JV).

(HNA) has pushed the Africa and Latin America market to the top of its agenda. (HNA) operates a Beijing - Dubai - Luanda route. (HNA) Chairman, Chen Feng has said (HNA) is committed to international market expansion and is actively working on international mergers and acquisitions activities, especially in Africa and other emerging markets.

Bahrain Air (BAZ) as well as Hainan Airlines (HNA) parent, the (HNA) Group have applied for licenses to operate domestic passenger services in Saudi-Arabia according to a report by "Reuters." Earlier, Gulf Air (GUL) and Qatar Airways (QTA) had already publicly declared their interest in entering the so far highly regulated Saudi-Arabian market.

(HNA) plans to operate its first, yet-to-be-delivered 787 Dreamliner on the new Beijing - Chicago O’Hare route, which is expected to be launched next year. In a USA Department of Transportation filing, (HNA) said it would use the 787 “or equivalent long-haul airplanes in its fleet” to start 4x-weekly Chicago flights.

(HNA), which has 10 787s on order, sought compensation for delays last year. (HNA) Chairman, Chen Feng said earlier this year (HNA) would increase annual capacity by +10% and considered changing its 787 orders to 747-8s due to continuous delivery delays.

The Chicago route will be (HNA)’s second USA route and joins Beijing - Seattle. (HNA) signed a code share agreement with American Airlines (AAL) in March.

737-84P (38155, B-5685), delivery and A330-343X (1325, B-5903), Hong Kong Airlines (CRY) leased.

August 2012: Hainan Airlines (HNA) has signed a cooperation agreement with the Fujian provincial government to launch a new subsidiary, Fuzhou Airlines, as it expands into the South China market. (HNA) did not give a specific timetable for the launch, which needs approval from the Civil Aviation Administration of China (CAC). The regulator has raised the bar for new entrants in recent years, citing safety concerns.

Industry analysts point out Fuzhou Airlines would compete with Xiamen Airlines (XIA), which uses Fuzhou as one of its main operating bases. (XIA) holds a dominant position in the Fuzhou market with a 50% market share.

In recent years, China’s major carriers have forged closer cooperative relationships with different local governments, enabling them to receive favorable policy support as well as cash support.

Air China (BEJ) has launched Dalian Airlines (DLN) and Beijing Airlines with local government support. China Eastern Airlines (CEA) received cash injections from the Yunnan and Wuhan provincial governments to relaunch their branch companies in these 2 provinces.

September 2012: Hainan Airlines (HNA) reported a 1st-half net income of +CNY249.9 million/+$39.4 million, down -25% over the net profit of +CNY417.3 million for the year-ago period.

(HNA) cited the slowdown of domestic market demand, high fuel prices and the slowdown of yuan appreciation as the main reasons for the results.

Operating revenue climbed +20% to CNY13.89 billion against an increase of +20.4% in operating expense to CNY10.52 billion.

Passenger boardings jumped +14.89% to 11 million, with an average load factor of 83.7% LF, up +0.05 points over the year-ago period. Cargo traffic volume increased +4.8% to 138,500 tonnes.

October 2012: The Chinese conglomerate (HNA) Group (parent of Hainan Airlines (HNA), China Xinhua Airlines (XIH), Chang'an Airlines and Shanxi Airlines) has acquired a 48% stake in French airline, Aigle Azur Transports Aeriens (AZU). The deal makes the (HNA) Group the second largest shareholder of (AZU), after Go Fast Transport, and the first Chinese aviation enterprise to invest in a European airline, according to (HNA). It is reported the deal is worth about $40 million.

(AZU), established in 1946, is a scheduled and charter carrier. It operates a fleet of 12 A320s from its bases at Paris Orly and Charles de Gaulle airports, serving destinations in Algeria, Mali, Portugal, Russia, and Tunisia. In 2011, (AZU) carried 1.8 million passengers.

(HNA) is planning to add two wide body airplanes to (AZU)’s fleet, although it did not disclose the type. (AZU) will also open new routes from Paris to Beijing and other destinations. Chinese industry analysts point out that (HNA) has difficulty getting approval from the Civil Aviation Administration of China (CAC) to directly open this profitable business route, due to the severe slot shortage at Beijing Capital International Airport and fierce competition in the domestic airline industry.

Alongside its European and Asian network development, (AZU) will grow its North and West African links. (HNA) is a co-investor in a new Ghanaian airline, Africa World Airlines (AWA), which launched September 21.

Under the agreement, (HNA) will name two of (AZU)’s five board members. It also has the right to appoint a VP and Deputy Chief Financial Officer (CFO).

The (HNA) Group was founded in 2000 and is active in several sectors, including air transport and airport management. Its aviation arm, (HNA) Aviation, has a portfolio of more than >270 airplanes. It has invested in Turkey and Hong Kong, spanning passenger and cargo transport, maintenance and flight schools.

Hainan Airlines (HNA) plans to invest more than >CNY1 billion/$159 million in its new subsidiary, Fuzhou Airlines, to be launched in conjunction with the Fuzhou provincial government.

According to an industry insider, (HNA) would be the controlling stakeholder with a 60% stake. The Fuzhou provincial government, represented by Fuzhou National Assets Investment Holding Company, would hold a 20% stake and the other two unidentified companies would each hold a 10% stake.

There is no specific timetable for the launch, which needs approval from the Civil Aviation Administration of China (CAAC).

(HNA) hopes to increase its routes between East China and West China through the new venture.

Xiamen Airlines (XIA) dominates the Fuzhou market with a 50% market share.

November 2012: Hainan Airlines (HNA) has announced plans to use its A330-200 B-LNK (1286, B-LNK) in First (F)/Business (C) Class only configuration wet-leased from sister carrier, Hong Kong Airlines (CRY) for 2 of its 4 daily services between Beijing Capital (PEK) and Shenzhen Bao'an International (SZX) airports according to "Airline Route."

Moog won a 10-year exclusive contract with Hainan Airlines (HNA) to support its flight control systems on (HNA)’s fleet of 787s, including maintenance and inventory support.

(HNA) has selected (GEnx) engines to power its two additional 787 airplanes, which increases (HNA)’s total 787 fleet to 10 airplanes. The deal also includes long-term maintenance.

December 2012: Hainan Airlines (HNA) inaugurated services on the route from Beijing (PEK) to Abu Dhabi (AUH) en route to Luanda, the capital of Angola in western Africa, on December 2. 2x-weekly service will operate via with 767s (SEE PHOTO - - "HNA-2012-12 - ABU DHABI 767." (HNA) will see competition from Etihad (EHD)’s daily service from Beijing to Abu Dhabi, as well as from the weekly non-stop service from Luanda to the Chinese capital provided by (TAAG) (ANG) of Angola. (HNA) introduces Abu Dhabi as a new destination in replacement of Dubai, which it also served with 2x-weekly services until the end of November.

Hainan Airlines (HNA) is planning to compete with United Airlines (UAL) and American Airlines (AAL) on the Beijing - Chicago route.

The HNA Group continues to find it difficult to identify profitable markets for its 3 all-premium A330-200 configured with 116 seats, 34F in first class and 82C in business. The A330-200s were acquired to fly between Hong Kong and London on subsidiary Hong Kong Airlines (CRY), but were removed in September 2012 after suffering losses on the route.

While a viable option may have been to reconfigure the airplanes with economy (Y) seats, the airplanes have instead been transferred to (HNA)'s flagship investment, Hainan Airlines (HNA), and used on domestic sectors between Beijing and Shenzhen, the third busiest route in China and 24th in the world.

(HNA) has reported initial load factors ranging between 80% LF and 94% LF, but yields have been a challenge. Premium travel in China is still developing, with fares booked in advance not much more expensive than economy. The problem is acute for Hainan (HNA)'s all-premium services, where premium fares are offered at less than half the price of competitors. Despite this, (HNA) is considering expanding the service to Beijing - Guangzhou.

Profitability will continue to be a difficult goal, at least until market share and frequencies can be established.

Hong Kong Airlines (CRY)’s affiliate, Hong Kong Express Airways (HKE) will rebrand as a low-cost carrier (LCC) by mid-2013. (CRY) President, Yang Jianhong said the (LCC) will confront declining international market demand.

Hong Kong Express (HKE) and Hong Kong Airlines (CRY), both subsidiaries of Hainan Airlines (HNA), were launched in 2004 and 2006, respectively, and merged. Even though they are led by the same management staff, both carriers own separate air operating licenses (AOC)s.

(HKE) offers passenger service to destinations in China, Japan, South Korea, Thailand, Indonesia, and the Philippines with a fleet of Boeing 737NG airplanes.

Next year, Hong Kong Express (HKE) is expected to face fierce competition from Jetstar Hong Kong, the (LCC) launched by China Eastern Airlines (CEA) and Jetstar (IMU). (HKE) plans to operate three A320s initially and expand its fleet to 18 A320s by 2016. It will offer passenger service to Greater China region (China’s mainland, Hong Kong, Macau, and Taiwan), Japan, Korea, and Southeast Asian countries.

China’s Shanghai-based (LCC), Spring Airlines (CQH), also plans to launch a (LCC) subsidiary in Hong Kong in the near future.

Six complete Boeing 787s are awaiting a type certificate that the Civil Aviation Administration of China (CAAC) (CCC) probably will not issue until March. Hainan Airlines (HNA), owner of 3 of the airplanes, needs the 787s to open a route from Beijing to Chicago planned to begin in April 2013. China Southern (GUN) wants to put its 3 787s into domestic service first.

January 2013: Hainan Airlines (HNA) will launch 4x-weekly, Beijing - Chicago A330-200 service on September 3.

(HNA) will continue to pursue international deals this year when “the proper international business opportunities” come up, according to (HNA) Chairman, Chen Feng.

In recent years, (HNA) has accelerated its international expansion pace. Last year, Hainan Airlines (HNA)’s parent, the (HNA) Group acquired a 48% stake in French airline, Aigle Azur Transports Aeriens (AZU), making the (HNA) Group the second largest shareholder.

(HNA) said last year that it would launch a joint venture (JV), called Ghana’s Africa World Airlines, with the China-Africa Development Fund; Ghana SAS Financial Group; and Ghana Social Security and National Insurance Trust. “We would continue to push forward international (M & A) activities this year, and it is expected that a big international deal will be announced,” Chen said, declining to give details.

Chen also predicted a slower growth of Chinese market demand due to the slowdown of China’s domestic economic growth and high speed rail competition. “But for us, there are still plenty of good opportunities to conduct cross-border (M & A) activity,” Chen said.

Separately, (HNA) plans to introduce a strategic investor to reduce its 79% debt ratio. Last year, (HNA) increased its operating revenue to CNY126 billion/$20 billion, up +17%.

(HNA) must postpone opening some international routes due to continuous 787 delivery delays. The affected routes are to Western countries, including Beijing - New York service. (HNA) is scheduled to take delivery of its 1st 787 Dreamliner in the 2nd quarter.

“Frankly, it’s a little disappointing the 787 has been delayed so many times,” (HNA) Group Chairman, Chen Feng was quoted as saying by "Reuters." “We still think it’s a good airplane, but this has had some effect on our planning.”

(HNA), which has 10 787s on order, sought compensation for delays last year. It considered switching its 787 order to 747-8s because of the delays.

The (FAA) grounded the 787s on January 16 after two incidents involving a lithium ion battery. Japanese and USA officials continue to search for a cause or causes of the incidents (one on a Japan Airlines (JAL) 787, the other on the (ANA) 787) leading to the worldwide grounding of 787 Dreamliners that remains in place.

The Civil Aviation Administration of China (CAAC) (CAC) has not yet cleared the 787 to fly in China because of safety concerns and delivery delays.

A320-214 (5216, B-6958), leased to subsidiary, Boeing Capital Airlines (DER).

February 2013: Hainan Airlines (HNA) parent, the (HNA) Group is planning to launch Urumqi Airlines (UMQ), in conjunction with the Urumqi municipal government. The new subsidiary will further explore the market potential in West China.

The new venture will be launched based on the assets of Hainan Airlines (HNA) Xinjiang Branch Company (XIJ), which is the second biggest carrier in the Xinjiang Uygur Autonomous Region, following China Southern Airlines (GUN).

According to an industry insider, Haikou-based, Hainan Airlines (HNA) is expected to be the controlling stakeholder, but the ownership ratio has not yet been determined.

(HNA) President, Wang Yingming said the new subsidiary is expected to operate not only on regional routes in the Xinjiang Uygur Autonomous Region, but would open new routes to Middle Asia and Europe from Urumqi. It is also planning to launch an Initial Public Offering (IPO) “at the appropriate time.”

The new entity is expected to face fierce competition from China Southern Airlines (GUN), which plans to build Urumqi as its key hub in West China and open more new international routes to the Middle Asia, West Asia and Europe from the Xinjiang Uygur Autonomous Region.

It has become a growing trend for domestic carriers to strengthen their cooperation with local governments.

Hainan Airlines (HNA) has launched Capital Airlines (DER), in conjunction with the Beijing government; West Air (CHO) with the Chongqing government; Lucky Air (LKY) with the Yunnan government; and Tianjin Airlines (GCR) with the Tianjin government.

Additionally, Hainan Airlines (HNA) plans to invest more than >CNY1billion/+$159 million to establish Fuzhou Airlines (FZO) in conjunction with the Fuzhou provincial government.

Hainan Airlines (HNA) will launch 4x-weekly, Beijing - Chicago A330-200 service on September 3.

March 2013: Hainan Airlines (HNA) reported a 2012 net profit of +CNY1.93 billion/+$305.6 million, down -26.7% compared to +CNY2.63 billion in 2011.

Operating revenue jumped +9.9% to CNY28.87 billion, while operating expense climbed +10.6% to CNY 21.56 billion. (HNA) cited high fuel prices, the slowdown of domestic market demand and the continuous decline of international market demand as reasons for the profit decline.

Passenger boardings rose +10.05% to 22.6 million with an average load factor of 84.4% LF, improved +0.24 points over last year. Cargo traffic volume grew +0.21% to 292,600 tonnes.

Last year, (HNA) introduced 15 airplanes and phased out 6 airplanes. As of December 31, 2012, it operated a fleet of 117 airplanes. This year, it is scheduled to introduce 29 airplanes, comprising five 787s, 20 737-800s, two 737-700s and two A330-300s.

This year, (HNA) predicts the global economy will recover but inflation will become more serious. It also forecasts international fuel prices will remain volatile. In addition, the rapid construction of the domestic high speed rail could have some impact on (HNA)’s financial performance.

Hainan Airlines (HNA) parent, the (HNA) Group is planning to launch Heilongjiang Airlines in conjunction with the Heilongjiang provincial government.

The new subsidiary will further explore the market potential in Northeastern China. No details about ownership ratio have been released, but it is widely speculated that (HNA) would be the controlling stakeholder. The owners have not decided whether to launch this new venture as a regional carrier, a trunk carrier or a business aviation company.

The new entity is expected to face fierce competition from China Southern Airlines (GUN), which has a strong presence with its Shenyang-based Northern branch company in Northeastern China.

It has become a growing trend for domestic carriers to strengthen their cooperation with local governments.

Hainan Airlines (HNA) last month announced it will launch Urumqi Airlines (UMQ) with the Urumqi municipal government. It has also launched Capital Airlines (DER) with the Beijing government; West Air (CHO) with the Chongqing government; Lucky Air (LKY) with the Yunnan government; Tianjin Airlines (GCR) with the Tianjin government; and Fuzhou Airlines (FZO) with the Fuzhou provincial government.

April 2013: Hainan Airlines (HNA) reported a 1st-quarter net profit of +CNY183.84 million/+$29.6 million, up +4.7% from +CNY175.6 million in the year-ago

Hainan Airlines (HNA) plans to slow down its domestic acquisition pace to focus more on internal integration as global economic uncertainties increase and domestic economic growth slows.

“In the past, we went through rapid domestic acquisition. But owing to current global economic recession, we need to focus more on our internal integration to improve our core competitiveness so as to gear up for our further growth,” Chairman, Chen Feng said. He predicted a slower growth of Chinese market demand this year owing to the slowdown of domestic economic growth and high-speed rail competition.

(HNA) announced earlier this year that it plans to launch Urumqi Airlines in conjunction with the Urumqi municipal government and establish Heilongjiang Airlines with the Heilongjiang provincial government.

Chen noted (HNA) will continue to pursue international deals this year when “the proper international business opportunities” come up.

(HNA) has witnessed robust growth and accelerated its global pace over the past several years owing to the sharp decline of asset prices of some overseas enterprises impacted by the 2008 global financial crisis.

In 2011, (HNA) invested $27 million on Turkish cargo carrier (ACT) and purchased 100% stakes of (GE) SeaCo for $1.05 billion.

Last year, (HNA)’s parent, the (HNA) Group acquired a 48% stake in French airline Aigle Azur Transports Aeriens (AZU), making the (HNA) Group the second largest shareholder.

Hainan Airlines (HNA) said last year it would launch a joint venture, (JV) called Ghana’s Africa World Airlines, with the China-Africa Development Fund; Ghana SAS Financial Group; and Ghana Social Security and National Insurance Trust.

May 2013: Hainan Airlines (HNA) plans to rebrand its subsidiary, West Air (CHO) as a domestic low-cost carrier (LCC) to be better positioned in the West China market, according to Hainan (HNA) President, Wang Yingming.

Hainan Airlines (HNA) parent, the (HNA) Group is preparing to apply to the Civil Aviation Administration of China (CAAC) to launch 5 new airlines as the regulator loosens its grip on approving new entrants.

Lucky Air (LKY), one of the many airline affiliates of the privately-owned (HNA) Group, has applied to China's aviation regulator (CAAC) for permission to expand its business licence from domestic services only, to include regional flights to Hong Kong, Taiwan, and Macau. Expansion to "regional" markets in greater China is usually the first step for Chinese carriers to eventually open international markets.

Kunming, the capital of Yunnan province in southern China, is already linked to Hong Kong and Taiwan but not Macau. Kunming - Hong Kong is served by Hong Kong Airlines (CRY), also affiliated with (HNA). Hong Kong sees the most international seats from Kunming, while Taipei is the sixth-most popular international route.

Hainan Airlines (HNA) will be the 2nd Chinese operator of the 787 (after China Southern (GUN), with (HNA) also scheduled to take its 1st 787 in June, and a total of 7 787s by year-end. (HNA) has 10 787-8s on order.

June 2013: Hainan Airlines (HNA) has completed the rebranding of its subsidiary West Air (CHO) as a low-cost carrier (LCC) to tap China’s fast-growing low-cost market.

737-74P (39200, B-5806) leased to Lucky Air (LKY).

July 2013: The (HNA) Group, parent of Hainan Airlines (HNA), intends to wholly own Yangtze River Express (YTH).

Hainan Airlines (HNA), which has taken delivery of its 1st of 10 787s, plans to accelerate its international expansion pace. (HNA) is scheduled to take delivery of 4 787s this year. (HNA)’s President, Liu Lu said it plans to take delivery of its 2nd 787 in August. These 2 airplanes will operate on routes from Beijing to Haikou, Shanghai, and Chengdu. Its first 4 787 Dreamliners will fly on routes to Chicago, Seattle, and Toronto.

(HNA) 787-8 Dreamliner (34939, B-2722), the 1st (HNA) 787 Dreamliner which was built in Charleston, arrived in Haikou in July. The 1st Everett-built 747-8 (34938, B-2728) is scheduled to be delivered next month. SEE PHOTO - - "HNA-2013-07 - 787-8."

737-74P (38201, B-5288), delivery.

August 2013: Hainan Airlines (HNA) has reported a 1st-half net profit of +CNY645.16 million/+$104.6 million, up +29% over a net income of +CNY499 million in the year-ago period.

787-8 (34938, B-2728), ex-(N1006F) and A330-343E (1438, B-5935), ex-(F-WWKE) deliveries.

September 2013: Hainan Airlines (HNA) has taken the bold step of entering the Beijing (PEK) to Chicago O’Hare (ORD) market, by launching 2x-weekly flights on September 3rd using its relatively fuel-hungry A340-600s, although schedule data indicates that the airline plans to use its new 787s on the route from November 10th. Frequency increases to 4 flights per week in December, with service becoming daily from May 31, 2014. This is only Hainan Airlines (HNA)’s 2nd USA route from Beijing, following in the footsteps of (HNA)’s daily Seattle-Tacoma service, which is served with A330s. Competition on the route is considerable with both Oneworld (ONW) Alliance carrier American Airlines (AAL), and Star (SAL) Alliance member United Airlines (UAL), operating daily flights on the 10,600 km sector, with both carriers utilizing 777s on the route.

Hainan Airlines Group subsidiary, Tianjin Airlines (GCR) is expected to launch Guangxi Airlines (GXI) in conjunction with the Guangxi Beibu Gulf Investment Group, which is wholly owned by the government of the Guangxi Zhuang Autonomous region.

October 2013: 737-86J (37768, B-1906 - - SEE PHOTO - - "HNA-737-86J - 2013-10"), ex-AirBerlin (BER), ex-(D-ABMG), (GEF) leased.

November 2013: Hainan Airlines (HNA) reported a 3rd-quarter net profit of +CNY1.54 billion/+$251 million, up +28% compared to a net income of +CNY1.2 billion in the year-ago period.

(HNA) is planning a new service from Beijing to Boston next year. (HNA), the 4th largest airline in China, hopes to launch a 4x-times weekly flight in the second half of 2014. It plans to operate a 787 Dreamliner on the route and the planned service is subject to regulatory approval in the USA.

The news comes after the airline delayed its 787 service to Chicago to November 26. (HNA) launched 2x-weekly service to O’Hare in September, operating an A340-600. It plans to up the Chicago flights to 4x-weekly in December and daily by June next year.

December 2013: Hainan Airlines (HNA) parent, the (HNA) Group has received approval from the Civil Aviation Administration of China (CAAC) (CAC) to launch Urumqi Airlines in an effort to enhance its position in West China. The new venture is expected to launch based on the assets of Hainan Airlines (HNA) Xinjiang Branch Company, which is the 2nd biggest carrier in the Xinjiang Uygur Autonomous Region, following China Southern Airlines (GUN).

The Urumqi-based carrier has a registered capital of CNY3 billion/$490 million, in which Hainan Airlines (HNA) would make an investment of CNY2.1 billion to hold a 70% stake.

Hainan Airlines (HNA) President, Wang Yingming said earlier this year the new subsidiary is expected to operate not only on regional routes in the Xinjiang Uygur Autonomous Region, but would open new routes to Middle Asia and Europe from Urumqi. The (CAAC) had previously granted preliminary approval for the new carrier to operate passenger and cargo services, both domestically and internationally, with a fleet of Boeing 737s.

It has become a growing trend for domestic carriers to strengthen their cooperation with local governments. Hainan Airlines (HNA) has launched Beijing Capital Airlines (DER), in conjunction with the Beijing government; West Air (CHO) with the Chongqing government; Lucky Air (LKY) with the Yunnan government; and Tianjin Airlines (GER) with the Tianjin government.

Additionally, Hainan Airlines (HNA) plans to establish Fuzhou Airlines, Guangxi Airlines (GUX), Heilongjiang Airlines and Chang’an Airlines (CGN) with different local governments.

As Chinese domestic carriers partner with local governments, they seek cash support and favorable policies in terms of tax, Heilongjiang Airlines and Chang’an Airlines landing fees, ground handling fees and land resources. Local governments hope to stimulate economic growth by launching the airlines.

737-84P (36206, B-5855), 2 787-8s (34941, B-2729; 34945, B-2731) deliveries.

January 2014: The (CAAC) Southeast Regional Administration has granted a green light for Hainan Airlines (HNA) Company Ltd to set up Fuzhou Airlines, a joint venture (JV) invested by Hainan Airlines (HNA), Fuzhou State-owned Assets Investment Holdings Ltd, the Century Golden Resources Group, and the Ningbo Ruitong Network Technology Company, Ltd, according to a notice released on the website of the aviation watchdog.

According to the notice, the new entity has a registered capital of 2 billion yuan, of which 60% was contributed by Hainan Airlines (HNA) with 1.2 billion yuan in cash, 20% by Fuzhou State-owned Assets Investment Holding Company, Ltd with 400 million yuan, and the rest 20% by another 2 shareholders with 400 million yuan, accounting for 10%, respectively.

As a limited liability company, Fuzhou Airlines is licensed for domestic passenger and cargo transportation businesses. Based at Fuzhou Changle International Airport (FOC), the carrier is set to operate Boeing 737 airplanes.

In the initial stage, the new entrant will introduce professional & technical staff from Hainan Airlines (HNA) including pilots (FC), mechanics (MT), flight dispatchers, and cabin crew (CA).

The (CAAC) has begun soliciting submissions on Fuzhou Airlines and said that the approval will be granted unless it is informed of reasonable grounds to reconsider the plan before February 10, 2014.

An industry insider said that most flights between Fuzhou and other major cities are operated by Xiamen Airlines (XIA) Company, Ltd at present. Once (HNA) joins this market and sets up the Fuzhou Airlines, Fuzhou Changle International Airport will certainly open more routes, which are helpful for the airport expansion, thus it will lay a foundation for Fuzhou airport's effort to build an aviation hub.

Registered in Haikou with 4.1 million yuan, Hainan Airlines (HNA) is the nation's 4th largest airline with a fleet of nearly 390 airplanes, mainly engaged in international and domestic air passengers & cargo transportation as well as related business in air transportation. Fuzhou State-owned Assets Investment Holdings has a total asset of 1.79 billion yuan and a registered capital of 510.5 million yuan. The cooperation between the 2 sides will boost the local economy.

Later, Hainan Airlines (HNA) was given the go-ahead by the (CAAC) Southeast Regional Administration to establish its new subsidiary, Fuzhou Airlines (Fuzhou). Fuzhou Airlines is a joint venture between Hainan Airlines (60%), the Fujian state-owned Assets Investment Holdings Ltd (20%), Century Golden Resources Group (10%) and Ningbo Ruitong Network Technology Company Ltd (10%). Backed by CNY 2 billion/USD 33 million in start-up capital, Fuzhou Airlines is a limited liability company licensed to operate domestic passenger and cargo services. The (CAAC) has begun soliciting submissions on Fuzhou Airlines and said that, notwithstanding any objections to the start-up's application, approval to launch operations using 737s should be granted before February 10, 2014.

Hainan Airlines (HNA) parent, the (HNA) Group plans to launch Guilin Airlines in conjunction with the Guilin municipal government in May 2014, pending approval by the Civil Aviation Administration of China (CAAC). The new venture is expected to operate 3 airplanes initially with plans to expand its fleet to 30 airplanes in 3 years.

The (CAAC), which is expected to approve the launch, has loosened its grip on allowing new domestic start-ups. The (CAAC) has recently approved the launch of Jiuyuan Airlines and Fuzhou Airlines.

China’s local governments are competing to develop airlines’ business by increasing capacities or setting up new airlines to stimulate local economic growth.

With the aim of promoting Guilin, a city in the northeast of the Guangxi Region of China, as both a tourism and business destination, the Guilin government will subsidize the new airline's operations. The project is believed to be previously known as Guangxi Airlines (Guilin) as the (HNA) Group and the Guilin government had already announced similar plans in 2013, also involving Tianjin Airlines ((IATA) Code: GS, based at Tianjin) (GCR).

The Guilin local government also plans to establish an air travel group with the (HNA) Group to partner in the fields of air travel, including finance and network.

As Chinese domestic carriers partner with local governments, they seek cash support and favorable policies in terms of tax, landing and ground-handling fees, and land resources.

Hainan Airlines (HNA) has launched its 1st service to Denpasar (DPS) in Bali, Indonesia. In conjunction with local tour operators, (HNA) started 3x-weekly flights on January 15th on the 5,410 km route from Beijing (PEK). (HNA) will serve the route with 767-300s and will compete with China Eastern Airlines (CEA), who also serve the route with 3x-weekly flights.

Hainan Airlines (HNA) plans to deploy 787 Dreamliners on its Beijing - Seattle route from January 10, 2014. This will become the second 787 service in North America after (HNA) operated 787 on the Beijing - Chicago route, allowing passengers to enjoy dreamlike in-flight services on the plane.

(HNA) launched its Beijing - Seattle service on June 9, 2008. The flight is operated 4x-weekly on Mondays, Wednesdays, Fridays and Saturdays, and increased to daily between June and August to meet the increasing travel demands of passengers. The Seattle-bound flight HU495 is scheduled to take off from Beijing Capital International Airport (PEK) at 4:25 pm and arrive in Seattle at 12:05 pm; while the return flight HU496 will leave Seattle at 2:00 pm, with a arrival in Beijing at 4:55 pm the next day (all local time).

(HNA)'s 787 Dreamliner has 36C full, flat-bed business seats configured in rows of 2-2-2, as well as 177Y economy seats configured in rows of 3-3-3. Each seat has a 15-inch, touch screen panel and a power outlet. Each business seat also has a (USB) port. The Dreamliner provides lower cabin noise, better air quality and more comfortable cabin environment for passengers.

Currently, (HNA) operates 3 North American routes from Beijing to Seattle, Toronto and Chicago, which allows passengers to fly directly from Beijing to the North American cities. And (HNA) announced last month it will launch a non-stop international service to Boston from June 20, 2014, strengthening (HNA)'s 787 network across western and eastern USA.

February 2014: Hainan Airlines (HNA) plans to launch a new service linking Shanghai Pudong International Airport (PVG) with Toronto Pearson Airport (YYZ) on May 26, to compete with its rivals Air China (BEJ) and China Eastern Airlines (CEA). (HNA) will deploy its Boeing 787 Dreamliner on the route with 2x-weekly on Mondays and Thursdays. Flight HU7937 is scheduled to take off from (PVG) at 11:30 am and arrive at (YYZ) at 1:50 pm, with the return flight HU7938 departing (YYZ) at 3:50 pm and arriving at (PVG) at 6:50 pm.

In addition, Air China (BEJ) has been approved to launch Shanghai - Toronto route using a Boeing 777-300 airplane this month. China Eastern (CEA) also plans to open the route from June. The new services will increase the frequency of Shanghai - Toronto route to more than >10x-weekly, bringing more options to travelers.

(HNA), the fourth largest Chinese carrier in terms of fleet size, expanded its international network on February 23rd, with a new service from Hefei (HFE) to Singapore (SIN). The 3,663 km sector will be served 3x-weekly via its main base, Haikou, utilizing (HNA)’s 164-seat 737-800s. (HNA)’s 14th route from Hefei will face no direct competition from other carriers.

Hainan Airlines (HNA) announced that it will code share with Aigle Azur (AZU) to launch regular flights between Beijing and Paris from June 28, making it the airline's third destination in Europe following Berlin and Brussels. Under the code share agreement, (HNA) functions as the marketing carrier, while (AZU) is the operating carrier.

A brand new Airbus A330-200 will be deployed on the Beijing - Paris route, which is configured with 36C business class seats and 186Y economy class seats. Each seat is equipped with a (LCD) screen. The space between seats in the business (C) class reaches 72 inches, and every seat can be adjusted to a fully lie-flat bed, allowing passengers enjoy a more comfortable and colorful trip with personal entertainment system in all the cabins.

(HNA) will operate the new international service 3x-weekly on Mondays, Wednesdays and Saturdays. The outbound flight HU8531/ZI018 is scheduled to takes off from Beijing Capital International Airport (PEK) at 1:50 am and arrive in Paris at 7:25 am; while the return flight HU8532/ZI017 will depart from Paris Charles de Gaulle Airport (CDG) at 1:50 pm and land in Beijing at 6:25 the next day (all local time).

Currently, Hainan Airlines (HNA) operates Beijing - Berlin, Beijing - Brussels international services in Europe. The launch of Beijing - Paris service will further improve the airline's European long-haul network, provide more convenient choices for travelers, as well as promote economic, cultural and political exchanges between China and France.

(HNA) has ordered 10 787 Dreamliners, and 6 of them are already in service. Hainan Airlines (HNA)'s' 787 Dreamliner has 36 full, flat-bed business seats configured in rows of 2-2-2, as well as 177Y economy seats configured in rows of 3-3-3. Each seat has a 15-inch, touch screen panel and a power outlet. Each business (C) seat also has a (USB) port.

Hainan Airlines (HNA) currently operates its 787 Dreamliners on some of the most popular domestic routes, which include Beijing - Changsha, Beijing - Chengdu, Beijing - Haikou, Beijing - Hangzhou, Beijing - Shanghai, Beijing - Kunming, Beijing - Sanya and Beijing - Xiamen, as well as international routes from Beijing to Seattle and Chicago.

March 2014: Hainan Airlines (HNA) has reported a net income of +CNY2.1 billion/+$337 million for 2013, up +9.2% over the net profit of +CNY1.9 billion in 2012.

According to (HNA)’s filing released by the Shanghai Stock Exchange, operating revenue rose +4.71% to CNY30.23 billion on operating costs that rose +9% to CNY23.5 billion. Industry analysts credited “exchange gains resulting from the yuan appreciation” as the main contributor to the improved performance.

(HNA) noted it experienced “a rapid growth of air traffic volume” last year, but said “the worsening external operating environment” and “slowdown of China’s economic growth” hampered revenues. (HNA)’s mainline revenue from air transport operation grew only +2.37% to CNY27.51 billion.

Passenger boardings increased +16.4% to 26.2 million with an average load factor of 86.4% LF, improving +2% points over the prior year.
Cargo traffic volume increased by +7% to 313,300 tonnes.

Last year, (HNA) introduced 27 airplanes and phased out 13 airplanes, leaving a fleet of 131 airplanes comprised of 6 Airbus A330-200s, 7 A330-300s, 3 Airbus A340-600s and 1 A330-(VIP); +1 Boeing 737-400, 5 737-500s, 99 737-800s, 3 767-300s, and 6 787-800s.

Looking ahead, (HNA) expects the air transport market to continue to grow, especially in China’s less-developed cities and it believes domestic airports expansion projects will “bring new opportunities”. But domestic low cost carriers (LCC)s will “exert some impact” on traditional legacy carriers, although they have become “new growth points” for China’s airline industry.

A Boeing 787 Dreamliner of Hainan Airlines (HNA) landed safely at Dalian Zhoushuizi International Airport (DLC) at 10:30 pm March 3rd, marking the maiden flight of (HNA)'s 787 Dreamliner on the Dalian - Beijing route.

The Dalian - Beijing 787 service is operated 2x-weekly on Mondays and Fridays. Flight HU7283 is scheduled to depart Beijing at 9:00 am and arrive at Dalian airport at 10:10 am; while the return flight HU7284 will leave Dalian at 12:25 pm, with an arrival in Beijing at 1:50 pm.

Boeing (TBC) and Hainan Airlines (HNA) announced a 5-year pilot (FC) training agreement to support (HNA)’s recent introduction of the 787 to its fleet.

Under the agreement, Boeing Flight Services, a unit of Boeing Commercial Aviation Services, will extend (HNA)’s existing contract for flight training at Boeing’s Singapore and Shanghai training campuses on three Boeing models (the Next-Generation 737, 767 and 787). “The option of training campuses close to our headquarters and the training quality were the deciding factors in continuing our partnership, as is Boeing (TBC)'s unique knowledge and its ability to provide full training solutions,” Hainan Airlines (HNA) 787 Fleet Manager, Xing Tao said. “When I look back to our earlier experiences with Boeing in Seattle and Kunming, I realize how the business and technology has changed and how together, we have forged a great and enduring relationship.”

According to Boeing’s 2013 "Pilot & Technician Outlook" (a respected industry forecast of required aviation personnel), there is a demand for 192,300 new commercial airline pilots (FC) and 215,300 new maintenance technicians (MT) in the Asia-Pacific region through 2032.

Hainan Airlines (HNA) is the 4th largest airline in terms of fleet size in China. Its current fleet includes 118 Boeing airplanes. (HNA) serves scheduled domestic and international services on 500 routes from Beijing, Haikou and other operating bases on the mainland, and provides charter services.

Boeing (TBC) offers a comprehensive portfolio of commercial aviation services, collectively known as the "Boeing Edge," bringing value and advantages to customers and the industry. Boeing Flight Services provides integrated offerings to drive optimized performance, efficiency and safety through advanced flight, maintenance and cabin safety training, as well as simulator support and services through a global network of campuses on 6 continents. Boeing provides customers a competitive advantage by solving real operational problems, enabling better decisions, maximizing efficiency and improving environmental performance – intelligent information solutions across the entire aviation ecosystem.

Hainan Airlines (HNA)'s 787 Dreamliner has 36C full, flat-bed business seats configured in rows of 2-2-2, as well as 177Y economy seats configured in rows of 3-3-3. Each seat has a 15-inch, touch screen panel and a power outlet. In addition, each business (C) seat also has a (USB) port. The 787 Dreamliner provides lower cabin noise, better air quality and more comfortable cabin environment for passengers.

(HNA) currently operates its 787s on some of the most popular domestic routes from Beijing to Changsha, Chengdu, Haikou, Hangzhou, Kunming, Sanya, Shanghai, and Xiamen, as well as international routes from Beijing to Seattle and Chicago. Moreover, (HNA) plans to extend its 787 Dreamliners route network to Toronto soon.

Hainan Airlines (HNA) has signed an agreement with (GE) Capital Aviation Services (GECAS) (GEF) to lease 5 new 737-800s, scheduled for delivery in 2015. Sourced from (GEF)'s existing Boeing (TBC) order book, the 737-800s will assist (HNA)'s fleet renewal program.

April 2014: 20 years ago, Chen Feng used to push the refreshment trolley up and down the aisle of the lone Boeing 737 that comprised his startup airline. Today, based on the tropical Chinese island of Hainan, he controls a fleet of 483 planes - - and has a jet of his own, a Gulfstream G550, "Bloomberg Markets" magazine will report in its May issue. Even so, Chen, a devout Buddhist, said he's far from the stereotypical Chinese tycoon. "I live a simple life," he said.

As he sips a caffe latte in the lounge of the chalet-like Sheraton Davos Waldhuus Hotel in Davos, Switzerland, his words jar with the setting: At January's World Economic Forum, he's surrounded by other corporate titans. "I don't drink, smoke, have banquets, go to karaoke or get massages," he said. "I'm different from the other entrepreneurs in China."

Where Chen, 60, is more like them is in his vaulting global ambition. In 1995, Chen flew to New York and persuaded George Soros to invest US$25 million in his fledgling Hainan Airlines Company. Since then, backed by the Soros imprimatur, he has ridden the boom that transformed balmy, coconut palm - fringed Hainan, 2,500 km/1,550 miles south of Beijing, from a backwater into a billionaires' playground reminiscent of a Chinese Hawaii or Riviera.

From his Buddha-shaped, 31-story headquarters in Hainan's increasingly high-rise capital, Haikou, Chen now chairs the (HNA) Group, a closely held global transportation, logistics, retail, property, tourism and financial services empire, that reported revenue of US$17.5 billion and pretax profits of +US$837 million for 2012.

Among its US$58 billion worth of assets: a New York office tower, a Spanish hotel group, a French airline and controlling stakes in 10 companies listed on mainland Chinese and Hong Kong exchanges. "Chen's smart, brave and a gambler," said Albert Louie, founder of Hong Kong-based consulting firm A Louie Associates Ltd, who advises foreign investors in China. "He's also politically well connected, and unlike China's Internet entrepreneurs, he isn't in industries that the government might consider threatening to have Communist Party control."

Chen has spent more than >US$3 billion on foreign acquisitions in the past 6 years alone. His biggest bet was the US$1.05 billion purchase in 2011 of (GE) SeaCo, the world's fifth-biggest container-leasing company, from General Electric Company.

Such deals would make the (HNA) Group, if publicly traded, one of the world's top 250 companies by assets, according to data compiled by "Bloomberg." The Founder, though, has much loftier goals. "By 2020, we can become one of the top 100 companies, and by 2030, we want to be one of the top 50," Chen said. "Assets are still cheap in the USA and Europe, and we will continue to acquire them. We need a batch of world-class companies to emerge from China to help the country's growth, and (HNA) will be one of those. We want to be everywhere."
That's a familiar refrain among China's entrepreneurs.

Since the global financial crisis ravaged the rest of the world in 2008, Chinese companies have made about US$360 billion worth of foreign acquisitions, according to "Bloomberg."

And, increasingly, private businessmen such as Chen are replacing state-owned enterprises as leaders of China Inc's global push, said Thilo Haneman, head of the cross-border practice at New York-based research firm Rhodium Group LLC. "What's going on is remarkable," Haneman says. "It's similar to what we saw from Japan 20 years ago."

Chen shouldn't be short of cash for his next deal. At the end of 2012, (HNA) had US$60 billion in credit lines from Chinese banks, according to its latest financial statements. Chen said he plans to raise additional capital by selling shares in several (HNA) units that are unlisted. In coming months, Chen said he will announce the initial public offering (IPO) of Hong Kong Airlines (CRY), the 2nd-biggest carrier in the former British colony. He acquired the airline in 2006. The listing may raise about US$1 billion later this year, according to a person with knowledge of the plan.

For now, the jewel in (HNA)'s crown remains Shanghai-listed Hainan Airlines (HNA), Chen's biggest public company, with a market value of US$3.6 billion. Together with five smaller affiliate airlines, it has a 15% share in the China market, according to the Sydney-based (CAPA) Center for Aviation.

Only the so-called Big Three state-owned carriers (Air China (BEJ), China Southern Airlines (GUN) and China Eastern Airlines (CEA)) have larger shares in the world's 2nd-largest aviation market after the USA.

Hainan Airlines (HNA)'s 23 international destinations include Chicago, Seattle, and Toronto. Later this year, Chen will add a Boston service using Boeing 787 Dreamliners. That shows his determination to gain market share on China - North America routes now dominated by Air China (BEJ) and United Continental Holdings (UAL), said Will Horton, a Hong Kong-based (CAPA) analyst.

"(HNA) is leaner and more internationally minded than the Big Three," Horton said. "It can become a serious player to North America."

(HNA)'s key selling points include a crash-free record; doting, glamorously garbed flight attendants (CA); and flat-bed business-class (C) seats that made it the first Chinese airline to win 5 stars from London-based rating agency Skytrax.

"Hainan is one of my favorite airlines," said Allan Zeman, 65, a director of Las Vegas-based Wynn Resorts Ltd, whose private company, Lan Kwai Fong Holdings Ltd, has investments across China. "The 1st-class service is excellent, and the airplanes are relatively new."

Many of Chen's shareholders have had a less enjoyable ride. Since 2009, the Shanghai Stock Exchange Composite Index has been the 8th-worst performer out of 93 tracked by Bloomberg. And in the last 12 months, Hainan Airlines (HNA)'s shares have declined -17% compared with the index's -4% tumble.

Two of Chen's other 7 companies listed in Shanghai and Shenzhen have also fallen. In contrast, the unit into which Chen injected his (GE) SeaCo acquisition, Bohai Leasing Company, has jumped +28% over the same period. In Hong Kong, shares in Hainan Meilan International Airport Company (owner of Haikou's airport) have risen +17%, mirroring the increase in the Hang Seng Index.

Chen's most famous backer, Soros, is one investor showing a paper profit, according to data compiled by Bloomberg.

In 2005, Soros doubled his bet on Hainan Airlines (HNA) to US$50 million. Recently, following a share swap, he owned 10% of an unlisted (HNA) unit, Grand China Air, which in turn owned 30% of Hainan Airlines (HNA). That holding, equivalent to 3% of (HNA), was worth about US$110 million.

Even as he launches more public companies, Chen continues to control his empire through an unlisted holding company that isn't required to disclose its complete balance sheet or the identities of its main shareholders.

One key item (HNA) does not release is its net profit. Chen said that last year he and 6 other directors, who between them owned almost all of the stock, donated 20% of (HNA)'s shares, worth US$1.4 billion, to what he describes as a private-equity fund for charity.

The fund, named Ci Hang after a Chinese goddess, is (HNA)'s largest shareholder, he said. He said he ranks as the joint second-biggest shareholder, although he declined to reveal the size of his personal holding, making it impossible to determine how rich he is. Given Chen's calculation of the value of the donation, (HNA) is worth US$7 billion.

"Chen Feng is my idol, but I don't understand his company's structure - none of us can understand," said Wang Dafu, 48, a Cohiba cigar-chomping property developer worth US$1.2 billion, according to the Bloomberg Billionaires Index. Wang heads the Visun Group and serves as Chen's Deputy Chairman at the Hainan Federation of Industry & Commerce.

Although Chen is under no obligation to disclose more than he has about the workings of his private company, investors in Hong Kong Airlines (CRY)'s (IPO) should expect (HNA)'s ownership to be more transparent, said Ronald Wan, who helps manage US$200 million at Hong Kong-based Asian Capital Holdings Ltd.

"Hainan Airlines (HNA) has a competitive edge, and people always talk about the Soros investment," Wan said. "But when you invest in Chinese companies, you have to be clear about the shareholding."

Chen talks freely about how he navigated some of the most turbulent years in China's recent history. Raised in Beijing as the son of middle-ranking Communist Party officials, Chen was forced to leave school in his early teens after the Cultural Revolution broke out in 1966. Unlike most young people who were ordered to labor in the fields, Chen was sent to work for the People's Liberation Army Air Force in the Western province of Sichuan. When the turmoil ended in 1976, Chen parlayed that experience into a job in Beijing with the Civil Aviation Administration of China (CAAC).

In 1984, he won a scholarship (one of only 20 offered in China, he said) to study at an air-transportation school in Germany run by Deutsche Lufthansa (DLH).

In 1989, he took a job at the World Bank's loan office in Haikou. The following year, Hainan's administration hired him to launch its first airline. Given just US$1.4 million in government seed money, Chen raised a further US$41 million from local investors before successfully wooing Soros. For the USA billionaire, US$25 million was small change. For Chen, it meant much more. "Soros' reputation helped our image," he said.

Perhaps even more helpful has been the surging development of Hainan, China's smallest province, with a population of 9 million. In the past 5 years, the island's economy has averaged +11.7% annual growth, compared with the national figure of +9.2%.

Today, around the resort of Sanya, centuries-old fishing villages have been replaced by marinas packed with megayachts. Luxury hotels line its sandy beaches, including what Marriott International Inc says is its most profitable Ritz-Carlton-branded property.

Last year, Tiger Woods and Rory McIlroy played Mission Hills Haikou, a US$5.4 billion golf resort that boasts 10 courses.

"Hainan was an absolute dump," said Peter Churchouse, Chairman of Hong Kong-based property investor Portwood Capital Ltd. "The word phenomenal would not overstate the extent of the change."

Nobody has been better placed to exploit that change than Chen. Last year, the number of visitors to Hainan jumped +11% to 37 million. And of those arriving by air, 44% flew in on his planes, (HNA) said.

Chen even profited from those who traveled on rival carriers because he owns both of Hainan's airports, as well as hotels and travel agencies in the province. (HNA) is also the biggest property developer in Haikou. "It's impossible to visit Hainan and not put a yuan in Chen's pocket," consultant Louie said.

In 2006, having already expanded across mainland China, Chen turned to Hong Kong, acquiring, for an undisclosed price, Hong Kong Airlines (CRY) and a 2nd carrier, Hong Kong Express Airways (HKE), which he subsequently re-branded as a low-cost carrier (LCC).

In 2011 and 2012 came a flurry of Western acquisitions, including (GE) SeaCo. (HNA) paid US$259 million for a foreclosure-threatened Manhattan office tower, 1180 Sixth Ave, and US$126 million for Cassa Hotel New York near the Rockefeller Center.

He bought 24% of Spain's biggest business hotel chain, (NH) Hoteles SA, for EUR286.6 million/US$397.6 million and 48% of France's No 2 airline, Aigle Azur (AZU) for EUR51.8 million.

Not all of Chen's bets have been winners. In 2012, Hong Kong Airlines (CRY) abandoned an all-business-class (C) service between Hong Kong and London as corporate travel slowed.

Expansion into shipping coincided with a collapse in freight rates. Last year, an (HNA)-owned cruise liner carrying 2,300 passengers and crew was detained in South Korea, after another Chinese company obtained a court order over US$58 million it said it was owed for unpaid charter fees and ship broker commissions. (HNA), while denying liability, issued a public apology to stranded passengers.

Asked about the company's financial strength, Chen said (HNA)'s debt-to-equity ratio declined to 0.79:1 in 2012 from 0.81:1 in 2009. "People don't understand that our industry always has high debt levels," he said.

Chen's ambitions don't end with making (HNA) a global top 50 company. He has another grand plan. Chen is rigorously private about his immediate family, except to say, "It's not good for your children to have such wealth."

Having already donated 20% of (HNA) shares to charity, Chen said he and his partners aim to make arrangements to do the same with the rest of their stock after their deaths.

Given that Chen values the remainder of (HNA)'s shares at US$5.6 billion, his last deal could well be his biggest.

When Hainan Airlines (HNA) bought a 48% stake in the Aigle Azur Airlines (AZU) in 2012, Tan Xiangdong, a member of Hainan Airlines (HNA) board of directors, likened Hainan Airlines (HNA) to a huge fish stirring up stagnant waters inhabited by poorly performing airlines. "If everyone did nothing when times are hard, the water in the pool would turn increasingly bad. (HNA) is acting like a fish to stir up the water so things remain dynamic." "So even though the economic environment is bad, we still need to act quickly, so we don't miss good opportunities."

Aigle Azur Airlines (AZU) whose Europe - North Africa and Europe - East Africa routes are regarded as good assets, has become the 13th airline flying under the Hainan Airlines (HNA) brand.

Now the fish is stirring up more waters in Africa. It announced recently that on June 28 it will begin flights connecting Beijing and Paris, and then connect various African destinations through Aigle Azur Airlines (AZU), by sharing international flight codes.

Established in China's biggest island and southernmost province, Hainan, Hainan Airlines (HNA) now flies to 90 cities across the world, via its 500 routes.

In March, the company published its annual report for last year, showing its revenue had reached 30.2 billion yuan/US$4.86 billion, up by +4.7% compared with the corresponding period in 2012. Profit rose +9% to 2.1 billion yuan. (HNA) said it carried 26.3 million passengers during the year, +17% more than in 2012. It said it will buy another 27 airplanes, including four Boeing 787s, this year.

As Chinese investment and tourism in Africa has been surging over the past few years, Hainan Airlines (HNA) has bet big on the African market.

Cumulative Chinese investment in Africa was worth US$21.7 billion by the end of 2012, more than three times the volume of Japanese investment, and the trade volume was more than >US$200 billion, government figures say.

In 2006, Hainan Airlines (HNA) teamed up with Brussels Airlines (DAT)/(EBA) to attract more Chinese passengers, and they have carried an average of more than >50,000 passengers a year to Africa.

(HNA)'s flights reach 17 cities in 16 African countries, including Conakry, capital of Guinea and Dakar, the capital and chief port of Senegal.

In addition to Brussels Airlines (DAT)/(EBA) and Aigle Azur (AZU), Hainan Airlines (HNA) works with other European airlines, including CorsAir International (COR) in France. It is all part of (HNA)'s plans for Africa, said Luo Xianxiang, Assistant Manager International Business Development with (HNA).

Bah Thierno Maadjou, counselor of the Guinea embassy in Beijing, said air transport between China and Africa still needs a lot of improvement. "In Guinea 80% of businessmen trade with China, and they frequently fly between Guinea and Beijing or Guangzhou to place orders," he said. "But they need to make transits once or twice in Addis Ababa, in Dubai, or in Paris. If there were more choices and transit times were shorter, it would certainly help China - Africa business. "In 2012, we established Africa World Airlines (AWA) in Ghana with the (SAS) Finance Group, (SSNIT) and China - Africa Development Fund." (AWA) flies domestic routes in Ghana.

"The (AWA) project is the first investment of Hainan Airlines (HNA) in Africa," the company said, "and (HNA) is among the first Chinese airlines companies with such links." "This targets the West African market, which is still very backward in ground transport in most areas."

Until last September, Hainan Airlines (HNA) has had flights linking Beijing, Abu-Dhabi and Angola but the flights have been stopped because of a lack of patronage, but (HNA) may resume if there is enough demand. (HNA) said many of its Chinese customers flying to and from Africa work for big enterprises such as Petro China, China Road & Bridge, and China Railway Group Ltd. Over the past few years, these companies have needed to send hundreds of staff to Africa, who are working on investment or aid projects.

Han Zhi, Manager of Hainan Airlines (HNA)'s Code-share, Interline & International Relations, Marketing & Sales Department, said the company may not start a direct route to Africa in the coming one or two years, so linking with European airlines is crucial to expanding its presence in Africa. "Through code sharing arrangements with many European airlines, we offer more choices for Chinese passengers, and certainly we share the economic benefits with our partners."

Wang Xiaodong, General Manager of Brussels Airlines (DAT)/(EBA), General Sales Agent (GSA) China, said China - Africa routes via Europe are not as well developed as many other routes, but they have good potential. "Hainan Airlines (HNA) and Brussels Airlines (DAT)/(EBA) have different strengths," Wang said. "(HNA) is good at attracting passengers from the Chinese market, while (DAT)/(EBA) is traditionally strong in the Africa market."

Wang is also the General Manager of South Africa Airways (SAA), Beijing office. The airlines opened a direct flight from Beijing to Johannesburg in January, 2012. It has attracted many passengers flying to southern and western Africa.

Brussels Airlines (DAT)/(EBA) started flying to Africa in the 1920s and now flies to 30 destinations there. It became a member of the Star (SAL) Alliance in 2009. Since last year, Hainan Airlines (HNA) and Brussels Airlines (DAT)/(EBU) have been jointly promoting the African routes.

Wang said: "Competition between European airlines is now intensive, and by partnering with China airlines (BEJ), we can reduce costs and make the best use of our advantages in Africa. We have been talking with Hainan Airlines (HNA) about sharing more international codes so we can take advantage of more opportunities in Africa."

Traditionally, Brussels Airlines (DAT)/(EBA) is strong in French-speaking areas in Western and Central Africa, and South Africa Airways (SAA) is strong in southern and western Africa, Wang said.

Bah Thierno Maadjou, counselor of the Guinea embassy in Beijing, said air transport between China and Africa still needs a lot of improvement. "In Guinea 80% of businessmen trade with China, and they frequently fly between Guinea and Beijing or Guangzhou to place orders," he said. "But they need to make transits once or twice in Addis Ababa, in Dubai or in Paris. If there were more choices and transit times were shorter, it will certainly help China - Africa business. "When we take French airlines, we need a visa very time we transit in Paris. I wish Chinese airlines could open more routes, preferably direct flights, to Africa, so we can bypass this hassle."

Avalon Airport, Victoria, Australia has struck a deal with (HNA) to establish international commercial flights within a year. The deal is with the (HNA) Group which runs Hainan Airlines (HNA) and includes airfreight services between Avalon and China.

The memorandum of understanding (MOU) has been signed during Australia's Prime Minister, Tony Abbott's visit to China and details plans to establish commercial flights and air freight services between Avalon Airport and China within the next 18 months. "We are thrilled to partner with one of the world's most professional airline groups," Avalon Airport Executive Chairman, David Fox said.

"This is a significant step for Linfox, particularly Avalon Airport and a great sign of things to come." "Today's signing heralds a major step forward in realising my father Lindsay Fox's vision of giving Asian markets ready access to Australian fresh produce."

Avalon has been courting international carriers for more than a year after the Federal Government paved the way for the airport to become Victoria's second international airport. Avalon (CEO), Justin Giddings said the (MOU) represented an enormous opportunity for the Geelong region.

"We will work closely with the (HNA) Group and the Australian and Chinese Governments over the coming months to remove barriers and ensure the success of future operations," he said.

Geelong Mayor Darryn Lyons has formally invited representatives of the (HNA) Group to a civic reception in Geelong. "The signing of an (MOU) between the (HNA) Group and Linfox is an important first step in discussions between the (HNA) Group and Geelong Australia," Mayor Lyons said.

"The (HNA) Group also has a tourism arm which provides complete travel packages, a fact that offers enormous future potential for Geelong's tourism and hospitality sector." "Perhaps the most exciting aspect of the (MOU) signing is the potential for freight transport between Avalon Airport and China - this would give Geelong-based producers direct access to the Chinese market."

Headquartered in Haikou in China's Hainan Province, Hainan Airlines (HNA) is China's 4th largest airline with nearly 500 airplanes covering more than >570 domestic and international routes.

Speaking from China, Premier Denis Napthine said the agreement commits Linfox and (HNA) to contribute jointly towards the creation of an international terminal and infrastructure at Avalon Airport.
"An international terminal at Avalon would mean more jobs for Victorians and greater access to international flights for people in Geelong and the surrounding regional areas," Dr Napthine said.

(HNA) Group subsidiary, Fuzhou Airlines (FUZ) is scheduled to launch its inaugural flight on October 1st. The Fuzhou-based carrier, which received approval to launch in January, plans to apply for an operating license at the end of April; it expects to receive it in June.

Fuzhou Airlines (FUZ) has a registered capital of CNY2 billion/$33 million in which Hainan Airlines (HNA) invested CNY1.2 billion for a 60% stake, while Fuzhou State-owned Investment Holding Company and Century Golden Resources Group hold stakes of 20% and 10%, respectively. Ningbo Ruitong Network Technology Company holds the remaining 10% stake. The new airline (which will operate at least three Boeing 737 airplanes on domestic routes) faces stiff competition from Xiamen Airlines (XIA), which has a 50% share of the market.

Chinese domestic carriers are forging agreements with local governments to receive cash support and favorable policies. Hainan Airlines (HNA) launched Capital Airlines (DER) in conjunction with the Beijing government; China West Air (CHO) with the Chongqing government; Lucky Air (LKY) with the Yunnan government; and Tianjin Airlines (GCR) with the Tianjin government.

Additionally, Hainan Airlines (HNA) plans to establish Guangxi Airlines (GUX), Heilongjiang Airlines, and Chang’an Airlines (CGN) with different local governments.

The (HNA) group is planning to launch Guilin Airlines in conjunction with the Guilin municipal government in May. The new venture which is subject to Civil Aviation Administration of China (CAAC) approval, is expected to launch with three airplanes.

(HNA) has formally retired the A340-600 airplanes from its fleet and 3 will be returned to (ILF).

May 2014: The Hainan Airlines Group, parent of Hainan Airlines (HNA), is expected to invest in Kenya’s cargo carrier, Astral Airlines as it further expands into the African market.

The (HNA) Group signed a memorandum of understanding (MOU) with the China-Africa Development Fund, Astral Aviation and the Consolidated Bank of Kenya to provide technical support and airplane lease service to the Nairobi-based airline.

Astral Aviation started operations in January 2001. It operates scheduled and non-scheduled/ad hoc cargo charters to regional destinations in Africa. Its main base is Jomo Kenyatta International Airport, Nairobi with an intra-African network encompassing 50 destinations.

In 2012, the (HNA) Group launched a joint venture (JV), Ghana’s Africa World Airline, in conjunction with the China - Africa Development Fund, Ghana (SAS) Financial Group, Ghana Social Security and National Insurance Trust.

June 2014: Hainan Airlines (HNA) has expanded its presence in the USA with the launch on June 20th of a 4x-weekly service to Boston (BOS) from Beijing (PEK) using (HNA)’s 787-8s. The 10,840 km route will be the first linking China with the state of Massachusetts. Hainan Airlines (HNA) already serves Chicago O’Hare and Seattle-Tacoma in the USA and Toronto in Canada. Xie Haoming, President of Hainan Airlines, said: “We have had our sights on Boston for a long time with our famous 5-star service. The new flight provides the fastest way to get to Beijing, the capital of China. The new flight saves about 3 hours off existing routings.” Boston becomes the 10th city on the USA mainland to get direct air services from Beijing.

July 2014: Hainan Airlines (HNA) commenced its 4th route to Yinchuan (INC), with the addition of 6x-weekly flights from Nanjing (NKG) on July 14th. The 1,334 km sector to the capital of the Ningxia Hui autonomous region will be operated by (HNA)’s 163-seat 737-800s. Competition on the new airport pair is provided by China Southern Airlines (GUN)'s daily operations and China Eastern Airlines (CEA)’s five weekly flights. (HNA) already serves Yinchuan from Dalian (6x-weekly), Hangzhou (daily) and Xi’an (daily).

(HNA) increased its domestic offering from Guangzhou (CAN) with the addition of 2 new airport pairs on July 15th, utilizing its 163-seat 737-800s. 1stly, (HNA) launched 3x-weekly operations on the 1,238 km sector to Chengdu (CTU). Besides this, (HNA) also inaugurated the 1,202 km route to Shanghai Hongqiao (SHA), with daily operations. (HNA) will face extensive competition on both airport pairs, with the former being served by China Southern Airlines (GUN) (63), Air China (BEJ) (49), Sichuan Airlines (SIC) (23), Shenzen Airlines (SHZ) (14), Beijing Capital Airlines (DER) (7), Chengdu Airlines (UEG) (7), and the latter already being flown by China Southern Airlines (GUN) (63), China Eastern Airlines (CEA) (62), Shanghai Airlines (SHA) (49), Spring Airlines (CQH) (28), Air China (BEJ) (14), Juneyao Airlines (JYA) (7).

The Civil Aviation Administration of China (CAAC) has approved the August 1 launch of Urumqi Airlines (URQ), a subsidiary of Hainan Airlines parent, the (HNA) Group to further explore market potential in West China.

(HNA) is finalizing terms with Boeing (TBC) on a purchase agreement for 50 737 MAX 8s valued at $5.1 billion at list prices. The pending order, subject to approval by the Chinese government, was announced at the Farnborough Airshow. “A long time, we’ve tried to get this deal done,” Hainan Group VP, Chairman & President Adam Tan said. “I’m so happy today we can get it done.”

Among a diverse fleet, Haikou-based, (HNA) currently operates nearly 100 737-800s. “The 737 is the backbone of our single-aisle fleet,” Tan said. Delivery dates for the 737 MAX 8s were not provided.

737-74P (39212, B-5825), leased to Lucky Air (LKY) and 787-8 (34940, B-2738), ex-(N1014X) delivery.

August 2014: Fuelled by a +7% growth in seats this August (when compared to the same month last year), Hainan Airlines (HNA) is rapidly approaching the landmark volume of 750,000 weekly seats. Easy to see why the airline is China’s #5 biggest carrier, behind the ‘Chinese Big Three’ (CB3) of China Southern Airlines (GUN), China Eastern Airlines (CEA), and Air China (BEJ), as well as Shenzhen Airlines (SHZ). However, it should be noted that the latter has actually leap-frogged Hainan over the last 12 months, adding +17% more seats this August when compared to August 2013.

The non-alliance aligned (HNA) has indeed come a long way since it formally began operations in 1993 with its 1st flight from Haikou to Beijing. It then took (HNA) another 11 years to launch its 1st intercontinental route (from Beijing to Budapest in 2004). Despite more than tripling its passenger volumes since 2005, the Skytrax 5-star rated (1 of just 7 airlines in world to make this grade) airline has also improved its average load factor by nearly +10 points over the same time frame too.

(HNA)’s top 12 destinations are responsible for nearly 60% of (HNA)’s total weekly flights. While the number of flights offered by the top 12 destinations has increased by a net of 175 flights year-on-year, their respective share has dropped marginally (-0.4%). Over the same time period, the #1 destination Beijing, has grown its number of flights by +3.2%


Star performer status was reserved for Lanzhou, the capital and largest city of Gansu Province in NW China, which has witnessed a +51.4% spike in its weekly flights, and as a result seen it rise from 17th spot to tenth. By contrast, (HNA)’s original base of Haikou has received the biggest cut in flights over the last 12 months, with a drop of -4.9%.

Somewhat uniquely for a Chinese airline, neither Shanghai airport feature inside (HNA)’s top 12 destinations, with Shanghai Pudong coming in at #23 and Shanghai Hongqiao at #27. (HNA) currently offers 50 destinations from its Beijing hub as its #1 destination, with 2nd and 3rd placed Shenzhen and Guangzhou both offering 27 network points. (HNA) offers 14 international destinations from Beijing (6 in Asia and 4 each in North America and Europe).

With an impressive annual growth of nearly +68% in the last 12 months, (HMA)’s Beijing to Shenzhen route, which in August 2013 was only its 8th largest route in terms of weekly seats, has marched to the top of the August 2014 rankings. Clearly, Shenzhen has become a focus city for network growth at (HNA), as the only route from the top 12 to beat this annual increase is the Hangzhou - Shenzhen city pair, which has doubled in size in the same period. Of the 4 Haikou routes represented in the top 12, 2 have fallen in the last year (Guangzhou -29%, Beijing -16%) 1 has remained flat (Shenzhen) and 1 has grown (Changsha +5.5%).

In terms of international routes, the biggest 3 in terms of weekly seats are (HNA)’s flights from Beijing to Brussels (1,981), Seattle-Tacoma, and Moscow Sheremetyevo (both with 1,498). As (HNA) has seemingly opted for ‘intercontinental international’ services rather than ‘regional international’ ones, it is unlikely that any international routes will ever break into the top 12 (all of which are currently domestic). At the time of writing, there are 2 new services planned for (HNA) during the upcoming Summer 2014, Winter 2014/2015 and Summer 2015 seasons:

* September 3 — 2x-weekly A330 service from Hangzhou via Xi’an to Paris (CDG) – ((HNA)’s 1st international service from Hangzhou, and its 2nd from Xi’an, joining Taipei);

* November 1 — daily 737-800 service from the new (HNA) province airport of Qionghai to Sanya.

Hainan Airlines (HNA) has renewed and extended its agreement with travel technology giant, Amadeus, offering new services to travelers. (HNA) has renewed its Amadeus e-Retail agreement to power global online sales, and signed up for Amadeus e-Personalise and Award Shopper to deliver a unique on line shopping experience.

The e-Retail platform enables customers across the world to efficiently and conveniently book their tickets in >30 languages. In addition, Amadeus Award Shopper means customers can redeem their frequent flyer miles online and also buy tickets, using a combination of miles and cash. Finally, the e-Personalize solution tracks user behavior and offers bespoke recommendations and access to a range of travel options, based on the context of the user.

Hainan Airlines (HNA) announced a brand-new customer service hotline 95339 which will be put into use from September 19. The new hotline will integrate the original service hotline (950718) with website hotline (950712) and provide customers with one-stop services, including ticket booking, flight information inquiry, and customized services for Gold and Silver card holders.

(HNA)'s new hotline 95339 will offer customers 3 types of services. The 1st is regular service, including flight information inquiry, ticket booking, rescheduling and refund, meal reservation and check-in. The 2nd is customized (VIP) service for honored guests in first (F) class and business (C) class, as well as the Fortune Wings Club Gold and Silver card holders. The 3rd is value-added service, including hotel booking and on-board seat reservation.

Customers in mainland China can call 95339 any time. (HNA) will provide 24 x 7 service in Chinese, English, Russian and other languages.

In appreciation for customers' support, Hainan Airlines (HNA) will offer discount tickets regularly through its hotline 95339. Free ticket delivery service will be provided in 35 cities, including Haikou, Beijing, Xi'an, Guangzhou, etc.

Boeing Shanghai Aviation Services redelivered the 3rd of 3 Boeing 737-400F passenger-to-freighter conversions to Hainan Airlines (HNA) and Yangtze River Express (YTH), both subsidiaries of the (HNA) Group.

737-84P (39214, B-1996), delivery.

September 2014: Hainan Airlines (HNA) reported 1st-half net income of +CNY483 million/+$78.5 million, down -25% over net profit of +CNY647 million in the same period last year.

Operating revenue increased +13% to CNY18 billion for the 1st 6 months of this year, while operating expense climbed +15% to CNY14.5 billion.

(HNA) cited premium market demand decline resulting from an economic growth slowdown, as the main reason for the profit decline. However, industry analysts pointed out the results were due to exchange losses resulting from yuan depreciation.

China’s big three carriers (Air China (BEJ), China Eastern (CEA), and China Southern (GUN) have all reported either sharp profit declines or losses due to exchange losses.

First-half passenger boardings rose +15.7% to 16.92 million with an average load factor of 86.23% LF, up +0.16 points over year-ago period. Cargo traffic volume grew +2.45% to 167,500 tonnes.

In the 1st half, Hainan Airlines (HNA) took delivery of 10 airplanes and phased out 6. It operates 157 airplanes, comprising 17 Boeing 737-700s, 109 737-800s, 3 767-300s, 8 787s, 6 Airbus A330-200s, 7 A330-300s, 4 A320s and 3 A319s.

Hainan Airlines (HNA) on September 3rd, began 2x-weekly flights from Hangzhou (HGH) to Paris CDG (CDG) via Xi’an (XIY). Flights depart Hangzhou every Wednesday and Saturday, but depart Xi’an on Thursdays and Sundays. (HNA)’s A330-200s will operate the new routes. (HNA)'s other current routes to European airports are from Beijing to Berlin Tegel, Brussels, Moscow Sheremetyevo and St Petersburg.

China's start-up carrier, Fuzhou Airlines ((IATA) Code: FU) (FZH) will take delivery of its 1st Boeing 737-800 on October 11 and take its inaugural flight in late October.

Fuzhou Airlines (FZH)'s 1st Boeing 737-800 airplane is scheduled to fly from Haikou to Fuzhou Changle International Airport (FOC) on October 11, which is also the verification flight of the airplane. With the arrival of 1st airplane, (FZH) will officially roll out its logo and airplane livery.

The initial fleet size of (FZH) will reach 5 airplanes, more than other start-up carriers in China, which usually do not have >3 airplanes before commencing operations. "With fleet expansion, we strive to operate a fleet of 40 airplanes by 2020." In order to cut costs, (FZH) chooses a 2-cabin configuration for its 1st 5 737-800s.

According to the approval of the (CAAC), 3 out of the 5 737-800s will be injected as assets into (FZH) by Hainan Airlines (HNA) (including 1 to be leased back to the Haikou-based carrier), with 3 introduced through leasing. Currently, the 1st 3 airplanes have completed their painting jobs in Haikou.

Now, Fuzhou Airlines (FZH) is proceeding on certification-approval of its operating certificate from the (CAAC) Southeast Regional Administration after the aviation watchdog released a notice on September 26. It is expected to commence operation in late October, with specific schedule still unsure.

According to the new airline, (FZH) will focus on domestic market in the initial stage, and gradually cover all major cities in China and some neighboring countries as its fleet expands. Relying on the comprehensive global network of (HNA), the new airline will extend its reach in SE Asia in the next 3 years. The company will cooperate with (HNA) after commencing operations, and is planning to introduce Boeing 787 Dreamliners in the future.

Hainan Airlines (HNA) will provide aviation professionals to Fuzhou Airlines (FZH), including 50 pilots (FC), 66 (MRO) (MT) staff and 100 cabin crew (CA). The new subsidiary is expected to face stiff competition from China Southern (GUN) subsidiary, Xiamen Airlines (XIA), which has a 50% share of the Fuzhou market.

October 2014: Hainan Airlines (HNA) is set to sign a 12-year lease agreement with Changjiang Leasing Company, Ltd for 12 737-800s. The deal is valued at roughly USD1.1 billion at list prices with deliveries scheduled for the 2nd half of 2015.

(HNA) is a prolific operator of the 737-800 series airplane with 99 currently in active service on flights throughout China as well as to Thailand, Kazakhstan, Singapore, and Taiwan.

November 2014: The (HNA) Group, parent of Hainan Airlines (HNA), reported that its passenger traffic increased +10.8% in October compared with the same period last year.

5 affiliated carriers (Hainan Airlines (HNA), China Xinhua Airlines (XIH), Chang'an Airlines (CGN), Shanxi Airlines (CHG) and Lucky Air (LKY)) carried 3.1 million passengers in the last month, up +10.8% year on year, according to their reports.

Specifically, domestic passenger volume registered a +10.6% growth to 3 million, with the number of international and regional passengers climbing +12.4% and 21.3% to 83,339 and 20,609, respectively.

Cargo volume totaled 32,065 tonnes, up +4.1% from a year earlier.

The passenger load factor rose +3.3% points to 88.9% LF, with the freight load factor rising +4.8% points to 86.99%.

December 2014: Hainan Airlines (HNA) on December 1st introduced daily flights on the domestic route between Harbin (HRB) in China’s NE and Sanya (SYX), located on Hainan Island. At 3,476 km, it sets a new record for the longest domestic airport pair served in China, beating the 3,375 km route from Shenzhen to Urumqi, also operated by (HNA). A330-300s will serve the route. This becomes (HNA)’s 15th route from Harbin and 18th route from Sanya. Harbin Taiping International Airport handled 10.26 million passengers (+12.2%) in 2013, making it China’s 23rd busiest airport, while Sanya Phoenix International Airport handled 12.87 million passengers (+13.4%) in 2013, ranking it 19th in China.

January 2015: Boeing (TBC) delivered 2 new 737-800s to Hainan Airlines (HNA).

February 2015: News Item A-1: Hainan Airlines (HNA) increased its cross-straits network with the introduction on February 6th of weekly (Friday) flights between Lanzhou (LHW) and Kaohsiung (KHH). No other carrier operates this 2,189 km route. This brings to 7 the number of routes operated by Hainan Airlines (HNA) between China and Taiwan. The other 6 routes are all to Taipei Taoyuan.

News Item A-2: Hainan Airlines (HNA) parent (HNA) Group’s subsidiary, (GX) Airlines (GXB) performed its inaugural flight February 13 from Nanning to Haikou as it deepens its cooperation with local governments to further explore the market potential of China’s secondary and tertiary cities.

The new venture has been launched by (HNA) Group subsidiary, Tianjin Airlines (GCR) and the Guangxi Beibu Gulf Investment Group, which is wholly owned by the government of Guangxi Zhuang Autonomous Region. It has a registered capital of CNY3 billion/$488 million in which Tianjin Airlines (GCR) holds a 70% stake, while the Guangxi Beibu Gulf Investment Group holds the remaining 30%.

(GXB), the new Nanning-based carrier, operates 5 Embraer E190s purchased from Tianjin Airlines (GCR) on domestic routes to Changsha, Linyi, Jinjiang, Yiwu, Xi’an, Tianjin, and Dalian. It plans to expand its fleet to 10 E190s at the end of this year and open >2 new international routes to neighboring (ASEAN) countries.

(GXB) is also expected to introduce 10 to 20 Airbus A320 airplanes to cover more big cities such as Beijing, Shanghai, Guangzhou, Shenzhen and other major cities in China, Singapore, Bangkok and more (ASEAN) cities.

It is a growing trend for Chinese domestic carriers to forge agreements with local governments to receive cash support and favorable policies.

The (HNA) Group has also launched subsidiaries Urumqi Airlines (URQ) and Fuzhou Airlines (FZH) with different local governments in recent months. In addition, it is also in discussions with the Heilongjiang provincial government and the Guangxi government to launch Heilongjiang Airlines and Guilin Airlines.

News Item A-3: Hainan Airlines (HNA) announced the addition of 3 weekly nonstop flights between Boston's Logan Airport and Shanghai's Pudong Airport beginning June 20. The new flight complements (HNA)'s existing nonstop service between Boston and Beijing, which will increase to daily service on May 1.

(HNA) will operate 2 Boeing 787 Dreamliners 3 days a week on the Shanghai route. The westbound 15-hour flights will depart Boston at 4:25 pm and arrive in Shanghai at 7:35 pm the following day. The 14-hour eastbound return will depart Shanghai at 11:45 am and arrive in Boston at 2:25 pm the same day.

Hainan (HNA) will partner with JetBlue (JBL) to provide connections for travelers on the new service from points throughout the USA and Canada. Cargo service will also be offered. "Since we began our Seattle route in June 2008, hundreds of thousands of people have experienced the award-winning service Hainan Airlines (HNA) provides between the USA and China," said Ji Chun Liu, Director of Hainan's International department. "Now we are excited to open a new nonstop route from Boston to the important commercial city of Shanghai. The community of interest and expanding trade between New England and China has grown this market exponentially, enhanced by the new reciprocal 10-year visas between the two countries recently put into place."

The other two new services will be from Silicon Valley to Beijing beginning on June 15, and from Seattle-Tacoma International Airport to Shanghai Pudong starting June 22.

News Item A-4: Hainan Airlines (HU) has launched a brand new safety video "The Adventures of Calabash Brothers" Hainan Airlines (HU) has launched a brand new safety video:
"The Adventures of Calabash Brothers" to celebrate the Chinese Lunar New Year of the Goat, also known as the Spring Festival, which falls on February 19.

(HNA) said it will initially introduce the latest safety video on board its Boeing 737-800 planes (without Sky Interior cabin) on (HNA)'s domestic flights (excluding Xinjiang routes) from the Spring Festival.

Calabash Brothers was one of the most popular Chinese animation TV series. The safety instruction was demonstrated by the characters of Calabash Brothers (an old man and 7 brothers, including Big Brother (Red), 2nd Brother (Orange), 3rd Brother (Yellow), 4th Brother (Green), 5th Brother (Cyan), 6th Brother (Blue) and Little Brother (Purple). Each has a unique supernatural ability such as super-strength, enhanced hearing and sight, invisibility, and pyro-kinesis, as well as a weakness.

The video shows the adventures of the 7 calabash brothers and their grandpa who fight with a Scorpion spirit and a Snake spirit during their journey.

News Item A-5: 2 737-84Ps (39219, B-1783; 41378, B-1785), ex-(N1786B & N1796B), and A330-243 (1591, B-5979), ex-(F-WWCN).

March 2015: News Item A-1: Hainan Airlines (HNA), China's largest privately held carrier, reported a net profit of +2.59 billion yuan/$423 million for 2014, up +20% from 2.16 billion yuan in 2013, according to the company's annual report. Total operating revenue rose +8.32% to 36.04 billion yuan.

(HNA) carried up to 35.6 million passengers in 2014, up +15.1% year on year, according to the statistics reported by the group. The average passenger load factor increased +1% point to 86.8% LF.

Looking forward, (HNA) expects market demand will continue to grow, especially the international market, as the robust growth of Chinese outbound travel and lower airfares and fuel prices help boost (HNA)’s financial performance. However, it also warns some challenges still remain, which include fluctuation of exchange rate and fuel prices, as well as intensified market competition, and the domestic high-speed rail.

Last year, (HNA) introduced 24 new airplanes and phased out 8 old ones. As of December 2014, (HNA) operated a fleet of 169 airplanes, including 16 Boeing 737-700s, 119 737-800s, 3 767-300s, 3 787 Dreamliners, 4 Airbus A320s, 3 A319s, 8 A330-200s and 8 A330-300s.

News Item A-2: Hainan Airlines (HNA) is to begin San Jose (SJC) - Beijing service on June 15.

News Item A-3: (GX) Airlines (GXB) is a subsidiary of the (HNA) Group, which controls several Chinese carriers, including Hainan Airlines (HNA), Tianjin Airlines (GCR), and Lucky Air (LKY).

Following its domestic expansion, (GXB) plans to commence flights to destinations in SE Asia by the end of 2015, using its fleet of 10 Embraer E190 airplanes. (GXB), the 1st local carrier in South China's Guangxi Province, is expected to launch its maiden flight from Nanning to Haikou this month.

The start-up airline has taken delivery of its 1st airplane with an Embraer E190 landing at Nanning Wuxu International Airport (NNG) at 12:00 pm on February 1. According to (GXB), it has intended to start >10 domestic routes, and Nanning - Haikou is most likely to be the inaugural flight.

(GXB) was set up with a registered capital of 3 billion yuan, in which Tianjin Airlines (GCR) contributed 2.1 billion yuan, accounting for 70% of total registered capital and the rest 30% (900 million yuan) was invested by the Beibu Gulf Investment Group in cash and assets.

Initially, (GXB) the Nanning-based carrier is committed to operating domestic services with 5 E190s. Besides, it also plans to launch >2 international routes to neighboring countries by the end of this year, with more destinations to be added to meet the travel demand of citizens in the Guangxi Province.

News Item A-4: A Hainan Airlines (HNA) Boeing 737-800 was fueled with a blend of sustainable aviation biofuel and petroleum jet fuel at Shanghai Hongqiao International Airport. China's 1st commercial biofuel flight landed at Beijing Capital International Airport.

News Item A-5: Hainan Airlines (HNA) has ordered 30 Boeing 787-9 airplanes to meet continuous growth of China’s market demand.

According to a (HNA) statement released by the Shanghai Stock Exchange, the deal is worth $7.7 billion at list prices, but the Haikou-based airline noted it would enjoy some discounts. The airplanes will be delivered by 2021.

(HNA) said it would accelerate international expansion pace as it plans to open 4 new international routes to Europe and the USA. It will also boost flight frequencies on routes to Boston and Seattle starting from Beijing and Shanghai this year.

2 737-84P (41568, B-1795; 41569, B-1796), (CIT) Aerospace (TCI) leased, 737-86J (36122, B-1793), Jackson Square Aviation leased, ex-(N361AB), 787-8 (38054, B-2759), deliveries.

April 2015: News Item A-1: Hainan Airlines (HNA) is expected to take a 48.21% stake in subsidiary, Tianjin Airlines (GCR), paving the way for all its subsidiaries to be listed as a whole entity.

According to an (HNA) statement released by the Shanghai Stock Exchange, (HNA) would circulate nonpublic 6.59 billion shares to collect CNY24 billion/$3.9 billion to become a controlling stakeholder as well as fund a fleet expansion.

(HNA) has previously stated it would purchase the stakes of all its airline subsidiaries, including Lucky Air (LKY), Beijing Capital Airlines (DER), Tianjin Airlines (GCR), West Air and Chang’an (CGN) airlines so it could go wholly listed to avoid competition. It has already become the controlling stakeholder of Lucky Air (LKY) and Beijing Capital Airlines (DER).

News Item A-2: Hainan Airlines (HNA) has introduced Boeing (TBC)’s Wind Updates solution into its operations to increase efficiency and reduce fuel consumption across the airline's global operations. The Wind Updates leverage real-time information that improves in-flight airplane performance based on atmospheric conditions. Boeing (TBC) Wind Updates will work to optimize Flight Operations across the Hainan Airlines (HNA) fleet of Boeing 787 and Airbus A330 airplanes.

News Item A-3: (HNA) is scheduled to introduce 105 airplanes, comprising 36 narrow body and 69 wide body airplanes between 2014 and 2018; it is expected to pay for 37 airplanes between May 2015 and December 2018, which is about CNY43.05 billion. (HNA) revealed it would use CNY11 billion of the CNY24 billion it collected to cover part of the 37-airplane payment.

(HNA) placed a firm order of 30 Boeing 787-9 airplanes in March.

May 2015: News Item A-1: Ni Hao, Seattle!


Introducing Hainan Airlines (HNA) nonstop service from Sea-Tac Airport to Shanghai: Nonstop service Sea-Tac to Shanghai Pudong 4x-weekly (starting June 22).

Nonstop service Sea Tac to Beijing 5x-weekly (daily from May 1).

Nonstop Routes:

Seattle to Shanghai Pudong, June 22 - October 23, 2015, Flight HU7956, Depart 12:OO, Arrive 16:30+1, Mondays/Wednesdays/Fridays/Sundays, A330;

Shanghai Pudong to Seattle, June 22 - October 23, 2015, Flight
HU7955, Depart 13:15, Arrive 09:35, Mondays/Wednesdays/Fridays/Sundays, A330.

See attached - - "HNA-2015-06 - Seattle to Shanghai.jpg."

News Item A-2: Hainan Airlines (HNA) and the Air Lease Corporation (ALE) have inked a long-term lease agreement covering 2 787-9s. The 787-9s will be sourced from (ALE)'s current order book, which comprises 46 787-9s and 787-10s due for delivery from spring 2016.

“These two new Boeing 787-9s leased to Hainan Airlines (HNA) will be (ALE)’s very 1st Boeing 787-9 delivery,” (ALE) Executive VP & Managing Director, Asia, Jie Chen said.

The 787-9s will be the longest-range airplanes in (HNA)’s fleet, joining its existing 787-8s. Last month (HNA) placed an order for 30 Boeing 787-9s, valued at $7.7 billion at list prices, to meet China’s continued growth. These airplanes will be delivered by 2021.

(ALE) already has 2 737-800s on long-term lease with Hainan Airlines (HNA), dating back to 2010.

June 2015: News Item A-1: Hainan Airlines (HNA) has begun serving the USA with non-stop flights from Shanghai Pudong (PVG). Having recently (June 15th) launched Beijing flights to its 4th USA destination, San José, (HNA) has now decided to serve 2 of its existing USA destinations, Boston (BOS) and Seattle-Tacoma (SEA) from a second Chinese airport. The 11,734 km Shanghai service to Boston launched on June 20 and will be served 3x-weekly using 787-8s and faces no direct competition. The shorter 9,186 km service between Shanghai and Seattle-Tacoma launched on June 22 and will be flown 4x-weekly using 260-seat A330-200s. Delta Air Lines (DAL) already serves this market with daily flights.

Hainan Airlines (HNA) also began daily service on the 1,098 km route between Beijing (PEK) and Shanghai Pudong on June 20. Competition on this route is provided by China Eastern Airlines (CEA) (32x-weekly flights) and Air China (BEJ) (14x-weekly flights).

News Item A-2: Avolon (AZV) delivered a 737-800 to Hainan Airlines (HNA). This delivery is (AZV)’s 1st airplane on lease to (HNA).

July 2015: News Item A-1: Hainan Airlines (HNA) anticipates huge surge in international business on the back of "Belt and Road" strategy, reports Wang Wen. Wang Wen Hainan Airlines Co Ltd expects international business to account for at least 40% of its total revenue by the end of this year, a top company official said.

The fourth-largest carrier in China is also eyeing major expansion on its international routes as it charts options to grow international business from the existing 16%, said XinDi, Chairman of (HNA), adding that "the growth goal is formidable, but achievable."

On June 15, (HNA) launched a new direct service from Beijing to San Jose, California, and in the subsequent week, added +2 more direct services to the USA from Shanghai.

Hainan Airlines (HNA) launched direct flights to Rome in May and plans to add more new destinations like Tel Aviv in Israel, and Prague in the Czech Republic this year, he said. "We will not be satisfied with this. Instead, we will keep seeking new opportunities for more routes in the USA and Europe. Company officials have already started exploring various destinations even as we are celebrating a new route," said Xin.

Xin, who took over as Chairman of Hainan Airlines (HNA) in 2014, attributed (HNA)'s expansion in the global market to government policies and market demands.

The Chairman said the government has been encouraging more enterprises to go abroad and some enterprises have blossomed in the international market.

The "Belt and Road" Initiative, a development strategy proposed by President Xi Jinping in 2013, is another opportunity that is expected to generate huge business for the Chinese carrier. The initiative refers to the "Silk Road Economic Belt," which will link China with Europe via Central and Western Asia, and the "21st Century Maritime Silk Road," which stretches from eastern and southern China to Southeast Asia, South Asia, Africa, and Europe. The plan is expected to benefit about 4.4 billion people in 65 countries.

At the same time, rapid growth and competition in the domestic market is prompting an increasing number of Chinese carriers to look abroad for growth. "In the past 3 years, Chinese carriers grew at a much faster pace than anticipated and were more active expanding international routes, rather than the domestic market," Xin said.

During the first quarter of this year, growth in the domestic aviation sector remained flat at 11%, compared with the same period in 2014. Growth in international routes, however, surged by +57% during the period, according to the "Center for Aviation," a global aviation market analysis company.

The significant increase in Chinese outbound tourism as well as international trade have also contributed to the growth in international air travel demand, Xin said. Rising competition from high-speed railway lines in China is also prompting carriers like Hainan Airlines (HNA) to find more opportunities in the international market, he said.

Chinese carriers are expected to overtake their USA peers in flights between China and the USA, with Air China (BEJ), China Eastern Air (CEA), China Southern Airlines (GUN), and Hainan Airlines (HNA) collectively planning 2,028 weekly USA - China flights from the 3rd quarter of this year, compared with 1,853 flights offered by USA companies.

Li Xiaojin, a professor at the Economic Management Research Base at the Tianjin-based Civil Aviation University of China, said: "The development of high-speed railways in China has prompted Chinese carriers to hunt for more capacity in the global market. The domestic market, especially the short-to-medium-range routes, have been affected by the high-speed railways."

(HNA) Chairman Xin agreed with Li, and said that the impact has been more in the eastern part of China than the central and western regions. "Hainan Airlines (HNA)'s current international market share is too small and we need to catch up in a short time," Xin said.

Air China (BEJ), which is the best internationally developed carrier in China, got 37% of its total revenue from the international market in 2014, while the share for (HNA) was just 13%. "(HNA) will make faster moves in the global market," Xin said.

As a latecomer in the international market, (HNA) has to face the fact that the market between major cities in China and major international cities has been occupied by the "Big 3" carriers in China (Air China (BEJ), China Eastern (CEA), and China Southern (GUN).

"We know where the problem is, and we do not have any advantage over our major competitors in the outbound market in Beijing, Shanghai and Guangzhou," Xin said. "Fortunately, the market in China is huge and the competition in some new markets is different," he said.

Hainan Airlines (HNA) is looking for more opportunities in the market between smaller cities in China and other countries, especially those in the USA. (HNA) plans to focus more on these cities to avoid direct competition with the "Big 3" in the major cities.

The company opened a new route from Hangzhou to Paris, via Xi'an, in 2014, and from Chongqing to Rome in April. It has also sought approval for the Tianjin - New York route. Once approved, (HNA) will have 7 Chinese cities flying to international destinations altogether, and 5 of them are 2nd-tier cities.

"The Gross Domestic Product (GDP) growth in some provinces is equal to or even higher than that of some European countries, and the international air travel demand in these provinces is also high," Xin said, adding that the performance of (HNA)'s international routes from second tier cities like Xi'an and Chongqing has been better than expected.

Xin, however, conceded that it would take more time to develop the intercity market within China.

The huge costs for market development are necessary, Xin said, adding that the development of domestic market would create more opportunities outside the traditional markets.

He cited the example of the Beijing - Seattle route, which was deemed unprofitable 7 years ago. However, (HNA) decided to open up the route and after several years, managed to make it profitable.

At the same time, the rapid expansion in the international market has triggered concerns as to whether (HNA) has enough resources, including human resources (HR) and airplanes, to support its plans.

Xin dismissed such concerns, and said: "Similar concerns were there when (HNA) was set up 20 years ago. But many were surprised when (HNA) did achieve a +20% annual growth."

Meanwhile, the buoyant trend in the capital market is also proving beneficial for (HNA). (HNA) raised 24 billion yuan through a private stock offering in April and plans to use 11 billion yuan of the proceeds for new airplane purchases, including 30 Boeing 787-9 jets.
The 787-9s will mainly be used on international routes, especially the North American market, Xin said.

But, (HNA)'s global ambitions do not limit to providing air services. Its parent company, the (HNA) Group, holds shares in several foreign carriers. "All these investments were accomplished by the group, but the purpose is to develop our aviation business globally," Xin said.

The group holds a 48% stake in Aigle Azur (AZU), a French Airline, and became its second-largest shareholder in 2012. The group also co-established Africa World Airlines Ltd in Ghana with 3 other investors in 2012.

Although these foreign subsidiaries are yet to make profits, they are key ingredients in the carrier's global strategy, said Xin. "Every enterprise should have its own going global plan."

News Item A-2: Hainan Airlines (HNA) announced the launch date of its nonstop service from Beijign to Prague, the capital of Czech Republic, which will be the 1st nonstop route between the 2 countries.

Starting September 23, (HNA) will fly 767 airplanes to Prague with 3 flights per week on Mondays, Wednesdays and Fridays. (HNA)
will deploy a 233-seat 767 on the new nonstop service, including 31C in business class and 192Y in economy class. The outbound flight HU7927 is scheduled to take off from Beijing Capital International Airport (PEK) at 2:30 am and arrive in Prague at 7:30 am, with the return flight HU7938 leaving Prague at 1:30 pm and landing in Beijing at 5:30 am the next day (all local time).

The to-be-launched Beijing - Prague service is the 7th European route of (HNA) following its Beijing - Brussels, Beijing - Berlin, Beijing - St Petersburg, Hangzhou - Xi'an - Paris and Chongqing - Rome.

News Item A-3: Avolon (AZV) delivered a Boeing 737-800 to (HNA). This delivery is (AZV)’s 1st airplane on lease to (HNA).

July 2015: News Item A-1: Hainan Airlines (HNA) sister company Bohai Leasing has outlined plans to acquire a 20% “strategic interest” in Irish lessor, Avolon (AZV) for $429 million.

Bohai will launch an offer for the (AZV) stake “on or about July 31,” once it has secured internal approval for the acquisition. (HNA) parent, the (HNA) Group, which is Bohai’s largest shareholder, has already agreed to back the transaction which should be completed by the end of August.

“The directors of both Avolon (AZV) and Bohai unanimously support the transaction and believe this strategic investment by Bohai will deliver long-term value for shareholders in both companies,” the companies said, announcing the deal.

The Chinese lessor will offer $26 per share for the (AZV) stake, marking a 14.5% premium on (AZV)’s recent share trading. This figure is +30% higher than the Irish lessor’s (IPO) price last December.

Bohai (CEO), Chris Jin said the Avolon (AZV) stake will help expand his company’s leasing activities and geographic reach. Meanwhile, (AZV) will benefit from strengthened links in China, which company Chairman, Denis Nayden described as “one of the most compelling growth opportunities in global aviation over the next 2 decades.”

The deal will include provisions that maintain (AZV)’s right to pursue consolidation opportunities. Also, Bohai will not be able to increase its stake within 2 years of the acquisition without (AZV) board approval. “In any event, Bohai has also committed not to increase its shareholding in (AZV) above >30% unless as part of a fully financed cash tender offer for all of the outstanding common shares of (AZV),” the companies said.

Bohai Leasing is listed on the Shenzhen Stock Exchange and is a subsidiary of the (HNA) Group. At June 30, Avolon (AZV) had an owned, managed and committed fleet of 260 airplanes, serving 56 customers in 33 countries.

Avolon (AZV) delivered a Boeing 737-84P (43658, B-6062) to Hainan Airlines (HNA). The delivery is the Irish lessor’s second airplane on lease to Hainan Airlines (HNA). Also, 737-84P (39963, B-6060), (SMBC) Aviation Capital leased.

News Item A-2: The (HNA) Group, owner of China's 4th-largest airline, Hainan Airlines (HNA), is in talks to acquire airport luggage handler, Swissport International Ltd.

Swissport's private-equity owner, (PAI) Partners (SAS), is seeking about US$3 billion from the sale. Negotiations could still fall apart, as the 2 parties have struggled to agree on price in the past several months.

Alongside a sale, (PAI) is also exploring an initial public offering (IPO) with banks, as well as potential takeover interest from other parties. A listing of Swissport could value the business at more than >US$3 billion.

(HNA), based on a tropical island in southern China, is seeking to add to its more than >450 billion yuan/US$72 billion of assets that include Chinese carrier Hainan Airlines (HNA) and container lessor SeaCo Srl. (PAI) agreed to acquire Zurich-based Swissport, which provides ground handling and cargo services to about 700 aviation customers, for more than >US$900 million in 2010.

Swissport has more than >60,000 employees and generates annual revenue of about 3 billion Swiss francs/US$3.1 billion. (HNA) is seeking a syndicated loan of more than >US$1 billion and is also discussing raising equity to finance the purchase. Both companies are working with advisers.

(PAI) has backed Swissport's expansion via acquisitions, including the purchase of aviation ground-handling company Servisair from Derichebourg SA in 2013. That agreement added about +15,000 employees and came 5 months after the company announced plans to buy a majority of the ground-handling operations of the (SAS) Group.

August 2015: Hainan Airlines (HNA) reported a 1st-half net profit of +CNY1.6 billion/+$261 million, more than tripled from a net income of +CNY482.6 million in the year-ago half.

Operating revenue dropped -7.6% to CNY16.62 billion, while expenses fell -14.6% to CNY15.22 billion. (HNA) cited fleet expansion, robust market demand growth and lower fuel prices for the much-improved performance.

First-half passenger boardings climbed +9.57% to 18.54 million with an average load factor of 88.59% LF, up +2.36 points year-over-year. Cargo traffic volume jumped +8.84% to 182,300 tonnes.

(HNA) took delivery of 16 airplanes and phased out 3 airplanes in the first half. As of June 30, it operated 182 airplanes, which comprise 17 737-700s, 127 737-800s, 3 767-300s, 10 787s, 4 A320s, 3 A319s, 9 A330-200s and 9 A330-300s.

Looking ahead, industry analysts predict Chinese carriers will continue to make impressive profits in the 3rd quarter, which is the traditional peak season for air travel, when market demand and air fares increase rapidly.

September 2015: News Item A-1: The Civil Aviation Administration of China (CAAC) has approved the (HNA) Group’s subsidiary Guilin Airlines, which is expected to formally launch by January 2016. Initially, it will operate A319 aircraft and hire staff from the (HNA) Group subsidiary, Capital Airlines (DER).

The new venture has a registered capital of CNY600 million/$94 million, comprising 60% ownership by Guilin Tourism Development (with a CNY360 million investment) and 40% holding by Guilin Air Travel Group (with a CNY240 million investment). Guilin Air Travel Group is a joint venture (JV) launched by the (HNA) Group and the Guilin municipal government.

China’s local governments are competing to develop airlines’ business by increasing capacities or setting up new airlines to stimulate local economic growth. As Chinese domestic carriers partner with local governments, they seek cash support and favorable policies in terms of tax, landing and ground-handling fees, and land resources.

(HNA) has launched Fuzhou Airlines (FZH), Urumqi Airlines (URQ), Beibu Gulf Airlines (GXA) with different local governments, and plans to launch Ningbo Airlines with the Ningbo municipal government.

News Item A-2: Azul Linhas Aéreas Brasileiras (AZL) has signed a cooperation agreement with Hainan Airlines (HNA) in which the 2 carriers have pledged to open up flights between Brazil and China.

Brazil's "O Povo" newspaper reports the agreement, which was signed in Beijing at the beginning of the month, will pave the way for flights between China and the north-eastern Brazilian town of Fortaleza using Lisbon as an intermediate stopover.

Should it launch, the service would be either airlines' maiden venture into the other's home market. At present, Air China (BEJ) is the only carrier to connect the two (BRICS) nations offering a 2x-weekly Beijing Capital - São Paulo Guarulhos service via Madrid Barajas.

While (AZL) currently specializes in budget Brazilian operations, its incoming fleet of A330-200s and A350-900s has allowed it to open up flights to the USA with Europe expected to follow at some point in the future. For its part, (HNA) serves destinations throughout Asia, the (CIS), and Europe. However, its Americas operations are limited to the USA and Canada.

News Item A-3: Bohai Leasing (AZV), the (HNA) unit that is taking over Avolon Holdings in a deal valued at US$7 billion, has revealed its ambition to change the international aircraft leasing landscape by becoming the world's third-largest player.

"In the future, Chinese lessors will account for a larger share of the global leasing market . . . how we differ from other Chinese lessors is, 1st, specialization, and 2nd, internationalization," Bohai Leasing's Chief Operating Officer (COO), Ren Weidong told the "South China Morning Post."

Bohai Leasing's purchase of New York-listed Avolon (AZV) for US$2.6 billion is not only the largest aviation deal from China by enterprise value, but also marks the first time a Chinese lessor has succeeded in taking over a Western one, after a Chinese consortium's failed attempt to buy the world's largest lessor, (ILFC) (ILF), back in 2012.

Ren said upon the deal's completion early next year, Bohai Leasing's total aircraft under management (including current and forthcoming fleet at its Hong Kong and mainland Chinese subsidiaries, Hong Kong Aviation Capital and Changjiang Leasing) would reach 525 planes worth 129.5 billion yuan.

"This means we are already larger than (BBAM) (BBB), making us the world's No 3 in aircraft leasing," he said, adding that Bohai Leasing was already the world's largest shipping container lessor, after its acquisition of Cronos and Seaco.

A total of 14 units make up the (HNA) aviation and shipping conglomerate's leasing arm, including seven focused on aircraft leasing. Bohai Leasing is expected to merge the 2 overseas aircraft leasing units by downsizing Hong Kong Aviation Capital and moving its senior executives to join Avolon (AZV)'s in Ireland.

Ren declined to comment on any merger plans but said the Avolon (AZV) acquisition would help Bohai Leasing do more operating leasing to an international clientele. That was, in essence, asset management, he said, requiring sophisticated knowledge of aircraft residual value that many Chinese lessors had yet to learn.

"The purpose for a leasing company to invest in aircraft is to maximize the value in the asset through constant trading (buy low, sell high)," he said. "To be honest, most Chinese lessors have been doing very little in the management of an aircraft after it is delivered to a lessee, but that is key to your future return".

China's aircraft leasing companies have grown quickly in numbers and size to rank among the world's largest, since they emerged in the late 2000s, but Thomas Kaplan, a Hong Kong-based analyst at aviation consultancy, Ascend, said most had focused on doing finance leasing and few had experience in dealing with operator default or finding aircraft a 2nd home, after the 1st lease term of 8 to 10 years expired.

While Bohai Leasing's purchasing price of Avolon (AZV)'s shares (at a 55% premium over its initial public offering price in December) is considered too high by some market observers, Ren said Avolon (AZV) was "a very good example where shareholders' interests had been maximized through constant transaction of aircraft portfolios since it was formed in 2000".

Shenzhen-listed, Bohai Leasing raised 1.5 billion yuan through 2 bond issuances this month. It also has a pending private placement plan to raise 16 billion yuan.

"The [leasing] market is in an upward cycle despite some volatility . . . we expect nearly 70% of China's demand forecast by Boeing (TBC) for >6,000 new planes worth US$950 billion in the next 20 years will be provided by lessors," Ren said.

"Aircraft leasing in China has entered the asset management age," he said, adding that Bohai Leasing (AZV) had set up a joint venture (JV), Tianjin Air Capital, with the Tianjin Dongjiang free trade port government, to provide aircraft asset management consultancy services to 3rd parties.

News Item A-4: Hainan Airlines (HNA) will launch a round-trip service between Beijing and Tel Aviv, the 2nd largest city in Israel starting April 28, 2016, building an air channel for political, economic, tourism and cultural exchanges between these 2 sides.

Haikou-based, (HNA) will become the 1st airline in China to fly the Beijing - Tel Aviv route. El Al Israel Airlines (ELA) currently operates the route 3x-weekly with 767-300s.

The 3x-weekly service will be operated on Tuesdays, Thursdays and Sundays. Flight time will be 11 hr from Beijing to Tel Aviv and 9 hr, 30 min. from Tel Aviv to Beijing. The Tel Aviv-bound flight HU7957 is scheduled to take off from Beijing at 1:55 am and land in Tel Aviv at 7:15 am, with the return flight HU7958 leaving Tel Aviv at 1:25 pm and reaching Beijing at 5:00 am the next day (all local times).

The new service will use the latest luxury wide body Airbus A330 aircraft, with 36C business class seats and 178Y economy class seats. The spacious and comfortable new business (C) class seat allows a 180-degree-lying, offering soft massage service for passengers. Equipped with (HD) (LED) screens and adjustable reading lights, the cabin provides customers with private and comfortable room. The touching-type (LCD) Television Entertainment Systems will enrich passenger's flight experience up in the air.

Located at the southeastern shore of the Mediterranean Sea, the State of Israel is the birthland of Judaism, Islam and Christian faiths. With a population of over >8 million, Israel is the only Jewish-dominated state around the globe. With the remarkable achievements in science, high-tech and agriculture, Israel has made magnificent contributions to world science and engineering.

As the second largest city and economic and cultural center of the country, Tel Aviv is called the "unceasing city." It is open, active, modern, featuring cosmopolitanism and a strong art atmosphere, and is also identified as Israel's capital of culture and art. The state of Israel's numerous historic and religious relics, the scenery of the Mediterranean Sea and the Dead Sea attract travelers from the world for sight-seeing and vacation each year.

Hainan Airlines (HNA) has started 4 European destinations (Berlin, Brussels, Paris, and Rome, and 5 in North America (Boston, Seattle, Chicago, San Jose, and Toronto). Since 1993, (HNA) has launched over >600 domestic and international routes, reaching nearly 90 cities in Asia, Europe, America, and Africa.

4 737-84P (41383, B-6061; 41484, B-6063; 41485, B-6065; 41487 B-6066), ex-(N1795B), and 1 A330-343E (1663, B-8016), ex-(F-WWYP) deliveries.

October 2015: News Item A-1: (HNA) will launch a new international service linking Beijing with Manchester from June 2016.

Starting June 10, 2016, (HNA) plans to operate the Beijing - Manchester service 4x-weekly on Mondays, Wednesdays, Fridays and Saturdays, using 2-class Airbus A330-200 aircraft, and adds to its newly introduced Chongqing - Rome and Beijing - Prague schedules that launched in May and September this year.

(HNA) Group Chairman, Chen Feng said (HNA) is actively expanding into international markets as part of China’s new “One Belt, One Road” global transport initiative.

The outbound flight HU793 is scheduled to depart from Beijing Capital International Airport (PEK) at 1:45 am and arrive in Manchester at 6:05 am; while the return flight HU7904 will take off from Manchester at 12:00 pm and land in Beijing at 5:25 am next day (all local time).

Reservation is currently available in full-fare Business (C) and Economy (Y) Class.

(HNA) has already outlined ambitious plans to expand its network into Europe, and previously tested the direct-flight UK market with a series of nonstop flights from Beijing’s Capital International Airport to Birmingham International Airport from July - August this year.

(HNA), which is a privately held carrier owned by Chen Feng’s (HNA) Group, is in the top 10 Chinese carriers flying international routes.

Based at Haikou Meilan International Airport, it placed a $7.7 billion order for 30 Boeing 787-9s in March, saying it would use the airplanes to open new USA and European routes.

News Item A-2: Hainan Airlines (HNA) is the 4th largest carrier in China in terms of fleet size. However, it is the only airline based in the People 's Republic of China to earn a 5 star rating from Skytrax (not counting Hong Kong's Cathay Pacific (CAT).

Much of (HNA)'s service is focused on its namesake island, which is becoming a major tourist destination for both domestic and international travelers. In addition to its main base in Hainan's provincial capital, Haikou, (HNA) has a hub in Beijing and a number of focus cities around China (including economic hotspots like Chongqing and Shanghai).

* Building on its 5-Star Reputation

Now, (HNA) is trying to take its 5-star reputation to the bank by continuing to expand its international route offerings. (HNA) plans to launch service to both Tel Aviv and Manchester, England starting next year.

Hainan (HNA) has adopted a strategy that has become rather popular amongst up-and-coming airlines. In Manchester, they have found a market that has yet to be tapped. London residents already have nonstop connections to Beijing, but Manchester does not yet have such a service. (HNA)'s goal is to create a new "air bridge" between Northern England and China. This kind of service is often appreciated by people in "secondary" cities, because it means they do not have to travel to another hub in order to fly overseas.

* Adding More and More International Routes

This is not the first long-haul route that (HNA) has added to Hainan's map. In fact, the Manchester service, slated for takeoff in June of 2016, will be the sixth major transcontinental route launched in recent times. (HNA)'s Beijing - San Jose flight is another example of trying to develop service in a new, underserved marketplace. Today, most transpacific flights take off from (SFO), requiring a train or taxi trip north for travelers from San Jose and other parts of the Southern Bay Area.

Hainan Airline (HNA)'s other new long-haul routes are Chongqing - Rome, Shanghai - Boston, Shanghai - Seattle, and Beijing - Prague.

According to (HNA), more intercontinental flights are in the works. (HNA) is banking on its image as a premium airline to differentiate itself from others in the crowded Chinese marketplace. They claim to have better food, better service and more spacious seating than the competition. These claims are backed up to a certain extent by the Skytrax rating, which is based on flier survey results. Billing itself as a premium airline has always worked quite well for one of (HNA)'s main competitors, Cathay Pacific (CAT).

* Domestic Expansion

Hainan Airlines (HNA) has also become a major player on the domestic front. It has snapped up or launched a number of regional carriers, including business-oriented Beijing Capital Airlines (DER), Fuzhou Airlines (FZH) and Kunming-based, Lucky Air (LKY). They are also a minority stakeholder in Hong Kong Airlines (CRY).

(HNA) is obviously focused on leaving its niche behind and becoming one of the major players in China's long-haul and domestic marketplaces. The strategy of expanding into under-served destinations like Manchester could work in (HNA)'s favor. At the very least, it is a welcome trend both for Chinese travelers (and East Asian fans of Manchester's two popular soccer franchises) and for English fliers who are heading to China and don't want to have to connect through London or another European hub.

News Item A-3: Economy (Y) class travellers flying with Hainan Airlines (HNA) will be glad to hear that (HNA) is increasing the free baggage allowance for European flights.

Passengers who book economy class tickets through (HNA)'s official website (www.hnair.com) and global website (www.hainanairlines.com) will be able to check in 2 pieces of free baggage weighing 23kg each, as opposed to the single piece under the current rules, the Haikou-based carrier said on its official Weibo account.

The new baggage rule applies only to (HNA)'s flights to/from Europe and is applicable for tickets issued between October 20, 2015 - June 30, 2016, and for travel between January 1, 2016 and December 31, 2016.

The free baggage allowance rule for first (F) and business (C) class passengers will remain unchanged.

Passengers will need to pay excess baggage fee if their checked baggage exceeds the prescribed limits.

News Item A-4: Rolls-Royce (RRC) has reached an agreement worth US$2.4 billion for engines and services with the (HNA) Group. The agreement was signed during the state visit by Xi Jinping, the President of the People's Republic of China to the United Kingdom.

The (HNA) Group is a conglomerate with interests in aviation, financial services, tourism and hospitality, logistics, real estate and retail. (HNA) Aviation currently operates and manages, amongst others, Hainan Airlines (HNA), Tianjin Airlines (GCR) and Capital Airlines (DER), flies to over >250 cities and serves 72 million passengers annually. The (HNA) Group currently operates 33 (Trent 700) powered A330 aircraft.

The engines included in the agreement will power a total of 44 aircraft that have already been ordered with Airbus (EDS).

The agreement was signed in London, by (HNA) Group Chairman, Chen Feng and Rolls-Royce (RRC) (CEO), Warren East and was welcomed by Chinese President, Xi Jinping and UK Prime Minister, David Cameron.

* The agreement covers:

The deal includes (Trent 700) engines and TotalCare service support for 20 Airbus A330s; TotalCare service support for (Trent XWB) engines that will power 15 Airbus A350-900s; and TotalCare service support for (Trent 700) engines that power five A330F freighters and four Airbus A330s.

The (Trent 700) has won more than >60% of new orders over the last three years. More than >1,500 (Trent 700)s are now in service or on firm order, making it the most popular in-service (Trent) engine. The (HNA) Group agreement reinforces its confidence in managing a successful transition from the (Trent 700) to the new (Trent 7000), the exclusive engine for the A330neo aircraft.

November 2015: News Item A-1: Hainan Airlines (HNA) reported a net profit of +CNY2.49 billion/+$39 million for the 1st 9 months of 2015, up +32% over a net income of +CNY1.89 billion in the year-ago period.

Operating revenue for the 9-month period decreased -4.3% to CNY26.62 billion, while operating expenses fell -5.3% to CNY24.63 billion. Marker demand growth and lower fuel prices were credited as main reasons for (HNA)’s profit increase.

However, (HNA) reported a profit drop in the 3rd quarter due to yuan depreciation. (HNA) posted a 3rd-quarter net income of +CNY887.3 million, down -37% over the year-ago quarter. Operating revenue rose +1.9% to CNY10 billion against a +15% increase in operating expenses to CNY9.41 billion.

China’s big three all predicted they would report profit increase for the first 9 months, but would post a profit drop in the 3rd quarter.

News Item A-2: "European Union (EU) approves (HNA) Group’s Swissport Acquisition", by (ATW) Victoria Moores, November 20, 2015.

The European Commission (EC) has given the go-ahead for Hainan Airlines (HNA)’s parent, the (HNA) Group to acquire 100% of European ground handling company Swissport.

Over the summer, the (HNA) Group signed an agreement to acquire Swissport from private equity firm (PAI) Partners for approximately CHF2.7 billion. This deal has now been cleared. “The (EC) concluded that the proposed acquisition would raise no competition concerns because the companies' activities do not overlap,” the (EC) said.

Swissport is the world’s largest ground and cargo handler, processing 224 million passengers and approximately 4.1 million tonnes of cargo per year, generating a CHF3 billion turnover. It will remain a stand-alone business, following the acquisition.

The (HNA) Group, which owns 10 listed holdings companies and more than >30 companies overseas, said it is acquiring Swissport to develop its network of aviation, airport, logistics, and tourism services. “The business presence of the (HNA) Group, in particular its extensive knowledge of the China market, will also assist Swissport to more effectively expand emerging markets, including China, which will enhance and optimize the global presence of both parties,” (HNA) Group Vice Chairman & President, Tan Xiangdong said when the deal was announced in July.

With a workforce of around 60,000 personnel, Swissport is active at more than >270 stations in 48 countries, performing services for around 700 airlines.

News Item A-3: "The (HNA) Group is to Buy a 23.7% stake in Azul (AZL) for $450 million" by (ATW) Aaron Karp, November 24, 2015.

Haikou, China-based, (HNA) Group, the parent of Hainan Airlines (HNA), has agreed to buy a 23.7% stake in Azul Brazilian Airlines (AZL) for $450 million.

(AZL) said that (HNA) has made a “firm commitment” to acquire the holding. (HNA) is aggressively acquiring aviation assets globally; it just gained European Commission (EC) approval to buy 100% of European ground handling company, Swissport.

(AZL) (CEO), David Neeleman noted (HNA) is making a major investment in the Brazilian market at a time when Brazil’s economy is struggling. (HNA) views (AZL) as “a solid investment with high growth potential,” he said, adding, “The investment of $450 million, considering Brazil’s current macroeconomic situation, demonstrates that we have a winning business model and that the (HNA) Group, as a large investor, has absolute confidence in (AZL)’s team.”

(HNA), President Adam Tan said “The (HNA) Group is committed to expanding in the airline industry through strategic investments in companies with strong market positions and excellent management teams. We are pleased to partner with Azul in order to bring more choice and convenience to our customers traveling to and from Brazil.”

(HNA) and (AZL) said their partnership “will result in commercial agreements, joint negotiation efforts, and adjustments in aircraft allocation” and “also enables [(AZL)’s] entry into the Asian market.”

(HNA) joins (UAL) as an investor in (AZL). (UAL) earlier this year agreed to acquire a 5% stake in Azul (AZL) for $100 million.

(AZL), founded in 2008 by Neeleman (who also founded JetBlue Airways (JBL)), was a domestic-only operator until late 2014, when it launched services to the USA. In late 2014, (AZL) also signed a purchase agreement for 35 Airbus A320neos and announced it would lease another 28 A320neos.

December 2015: Hainan Airlines (HNA) has grown its international network with the addition of 3 new routes at the end of December. (HNA) returned to Australia, operating a 2x-weekly A330-200 service on the 8,787 km route from Xi’an (XIY) to Sydney (SYD). (HNA) previously served Sydney from Shenzhen in 2011 and 2012. The other 2 routes are both to Tokyo, but to different airports, and will both be operated by (HNA)’s 737-800s.

Kerrie Mather, Managing Director & (CEO), Sydney Airport, said: “Sydney Airport is pleased to welcome Hainan Airlines (HNA)’s 2x-weekly service from Xi’an to Sydney, marking our 6th new airline in 2015, and making us the world’s leading airport for Chinese long haul carriers. (HNA)’s arrival is great news for tourism in Sydney and New South Wales (NSW), with an expected +$26.5 million in additional annual visitor expenditure. Securing another new Chinese airline for Sydney Airport is testament to our continued work with government and industry partners to provide a positive visitor experience and attract more Chinese visitors to Sydney, our fastest growing inbound visitor market. (HNA) will also provide Sydneysiders with a direct route to the home of the Terracotta Warriors in China.”

Routes as follows:
Beijing (PEK) to Tokyo Haneda (HND) 737-800 3x, vs Air China (BEJ) 28x, All Nippon Airways (ANA) 14x, Japan Airlines (JAL) 14x;
Xi'an (XIY) to Sydney (SYD) A330-200 2x; to Tokyo Narita (NRT) 737-800 3x.

January 2016: News Item A-1: Hainan Airlines (HNA) on January 21 launched its 7th route to the USA, linking Changsha (CSX) and Los Angeles (LAX). The 11,222 km route will be operated 2x-weekly (Mondays and Thursdays) and will be flown by (HNA)’s 787-8s and faces no direct competition. “(HNA) is proud to bring our award-winning service and elite experience to Los Angeles,” said Hou Wei, VP of Hainan. “Since we began our Beijing - Seattle route in June 2008, hundreds of thousands of people have enjoyed the premier quality (HNA) provides our travelers. With expanding trade, stronger bilateral ties, and now reciprocal 10-year visas between China and the USA, this market is continuing to grow, and (HNA) is making a long-term commitment to our customers in China and the USA.” (HNA) already flies to Boston and Seattle-Tacoma from both Beijing and Shanghai, as well as from Beijing to Chicago and San Jose. For Changsha Airport, which handled just >18 million passengers in 2014 (making it China’s 12th busiest airport), this is its 1st non-stop service to the USA.

News Item A-2: "Bohai Leasing Completes Avolon (AZV) Acquisition" by (ATW) Victoria Moores, January 11, 2016.

Chinese firm, Bohai Leasing has completed its $7.6 billion acquisition of Irish lessor, Avolon (AZV), ranking its parent company the (HNA) Group as the world’s 4th largest lessor by asset value.

The (HNA) Group’s leasing interests now include Avolon (AZV), Bohai and Hong Kong Aviation Capital. “Avolon (AZV) will be the core aircraft leasing brand for Bohai Leasing and its parent, the (HNA) Group, and assumes management of the Hong Kong Aviation Capital (HKAC) business, another Bohai subsidiary,” (AZV) said.

Following the acquisition, (AZV) has become a wholly owned, indirect subsidiary of Bohai Leasing and its shares have ceased trading on the New York Stock Exchange.

Avolon (AZV) will remain headquartered in Dublin under its existing management, with a strategic Asian regional head office in Hong Kong and offices in Dubai, Shanghai, Singapore and the USA. “With a fleet of >500 aircraft, we are now the world’s 4th largest aircraft leasing firm,” (AZV) (CEO) Dómhnal Slattery said, including the wider (HNA) Group in that total.

(AZV) has 105 Airbus A320neos and A330neos on order, plus 20 737 MAXs and 6 787-9s. “We see significant opportunities for growth under Bohai’s ownership,” Slattery said, adding that (AZV)’s medium-term objective to become one of the world’s top-3 aircraft lessors.

Bohai Leasing is majority owned by the (HNA) Group, which owns stakes in 25 airlines: 20 in China, plus others in Brazil, France, Portugal, South Africa, and Turkey.

The (HNA) Group also owns 9 airports in China (with plans to invest in airports in other markets) along with European maintenance, repair and overhaul (MRO) firm, myTechnic, plus ground and cargo handling giant Swissport.

Bohai initially wanted to take a strategic stake of 20% in Avolon (AZV), but upped this to bid for all of (AZV)’s shares after an unnamed rival bidder emerged.

News Item A-3 China Aircraft Leasing Group (CHD) has entered into the 2nd aircraft purchase agreements with Airbus (EDS) for +2 more A320-200ceo series aircraft, in addition to the agreement for acquiring 22 aircraft signed December 31, 2015, to cater to strong customer demand of the Group’s aircraft. (CHD) also announced it has signed letters of intent with 2 subsidiaries of the (HNA) Group, Lucky Air (LKY) and West Air (CHO) on January 5, 2016, for the leases of 2 A320ceos, respectively. These 4 aircraft are expected to be delivered in 2016.

News Item A-4: "Hainan Airlines (HNA) Subsidiaries Launch Low Cost Carrier (LCC) Alliance" by (ATW) Katie Cantle, January 18, 2016.

Hainan Airlines (HNA)’s 4 subsidiaries have formed a partnership being hailed as the world’s 1st low-cost carrier (LCC) alliance.

The U-FLY Alliance brings together Hong Kong-based Hong Kong Express Airlines (HKE), Kunming-based Lucky Air (LKY), Urumqi-based Urumqi Airlines (URQ), and Chongqing-based, West Air (CHO).

Member carriers said that under the U-Fly Alliance they will deepen their cooperation and optimize slots connection. Together, they operate a total of 67 aircraft on 168 routes with 298 daily departures covering 85 Asian destinations.

“With the launch of the 1st low cost carriers (LCC) alliance in the world, the air transport market will enter into a new era, when passengers can fly to more diversified destinations and enjoy more secure flying experience with much lower air fares.” U-Fly Alliance Chairman Ma Zhimin said.

Meantime, the U-Fly alliance also promoted special launch fares on certain routes. The alliance said it plans to attract more member airlines to expand its route network in the coming days, but there was no mention of shared frequent flier or loyalty benefits.

(HNA) is not a member of any of the present 3 global alliances.

News Item A-5: "Hainan Airlines (HNA) to Reconfigure 100 Airplanes for Wi-Fi" by (ATW) Katie Cantle, January 15, 2016.

Hainan Airlines (HNA) plans to reconfigure 100 airplanes with in-flight Wi-Fi service in an effort to enhance its passenger experience.

(HNA), in cooperation with Beijing Shareco Technology, will invest CNY1 billion/$152 million to install Wi-Fi over the next 2 years.

(HNA) General Manager Cabin Service, Xu Fei said it is committed to build a brand-new cabin ecosystem to promote Wi-Fi and provide more new in-flight entertainment (IFE) products with partners that also include Bose and Panasonic. (HNA) uses Bose’s noise-canceling earphones on some international routes and it would promote it on all international long-haul Airbus A330 and Being 787 routes in March.

Other Chinese carriers are also investing in (IFE) products. (CEA) has partnered with Panasonic to provide in-flight Wi-Fi service on international routes from Shanghai to New York, Los Angeles and Toronto since November 2015. Air China (BEJ) plans to invest CNY150 million/$23 million to promote in-flight Wi-Fi. (BEJ) currently provides in-flight Wi-Fi on some domestic business routes, including routes from Beijing to Shanghai and Guangzhou.

News Item A-6: 737-86N (60688, B-7171) (GECAS) (GEF) leased, A330-343E (1703, B-8287), ex-(F-WWKP), Hong Hong Airlines (CRY) leased.

February 2016: News Item A-1: Hainan Airlines (HNA) said on February 4 that it will inject US$450 million into Brazil's 3rd largest airline Azul (AZL), a move it expects to expand its route network in South America, Africa, and Europe.

After the injection, (HNA) will become the largest shareholder of (AZL) with a 23.7% stake in (AZL).

In addition, (HNA) will provide (AZL) with a loan of US$150 million at a rate of 14.25%, with a maturity of 181 days.

The latest deal is related to the business already reported last year in which (HNA) became a shareholder of the company through an investment of US$450 million.

News Item A-2: (HNA) plans to open a route from Beijing to Tel Aviv in April and Manchester in June, according to international director Li Xiang, as it speeds up international expansion as more Chinese citizens opt for outbound travel.

(HNA) opened Changsha - Los Angeles in January.

Compared with China's big 3 (Air China (BEJ), China Southern (GUN) and China Eastern (CEA)) (HNA) has adopted a different business strategy of operating international routes from China's big cities to Europe and North America's secondary cities, or from China's secondary cities to Europe and North America's big cities.

"Last year, (HNA) added +37% more capacity on international routes, increasing capacity +69% on North America routes and +41% on European routes." (HNA) Vice Chairman Mu Weigang said it would consider opening more international routes to Latin America and Africa.

(HNA) parent, the (HNA) Group agreed to buy a 23.7% stake in Azul Brazilian Airlines (AZL) for US$450 million at the end of last year to pave the way for expansion into Latin America.

Besides Hainan, China's big 3 carriers and other smaller airlines (including Xiamen Airlines (XIA), Shandong Airlines (SHG), Sichuan Airlines (SIC)) have all committed to international expansion. Local industry analysts predict that in 2016, domestic carriers will boost capacity by +34% on international routes.

News Item A-3: Hainan Airlines (HNA), China's 4th largest carrier, is set to launch a nonstop service between Beijing and Calgary, Canada starting late June.

According to "Airline Route," (HNA), the Haikou-based carrier planned the Beijing - Calgary service on January 27, although the reservation is not opened yet.

Starting June 30, (HNA) will fly its Boeing 787 Dreamliner 3x-weekly between Beijing and Calgary. The outbound flight HU7977 is scheduled to leave Beijing Capital International Airport at 4:00 pm every Tuesday, Thursday and Saturday, arriving in Calgary at 1:05 pm; while the return flight HU7978 will depart from Calgary International Airport at 3:05 pm and land in Beijing at 5:10 pm the next day (all local time).

In November 2015, (HNA) submitted the route application to the Civil Aviation Administration of China (CAAC) for launching a 3x-weekly Beijing - Calgary service in June. (HNA) said this will be extended to 4x-weekly frequencies later on.

Hainan (HNA) launched its 1st flight to Canada in 2010, with service to Toronto.

Air Canada (ACN) (CEO) Calin Rovinescu had expressed interest in opening routes to Beijing from Calgary and Montreal during a 2013 speech, but mentioned difficulties in getting a viable slot at the slot-constrained capital airport. (ACN) did start providing Beijing - Montreal service in September through code share flights operated by Air China (BEJ), which also flies between Beijing and Vancouver. The two airlines first announced plans to form a joint venture (JV) in November 2014; however, it still hangs in the balance. (ACN) also serves Beijing and Shanghai on (ACN) via Vancouver and Toronto.

WestJet (WJI) code shares with several carriers in China, including Shanghai’s China Eastern (CEA) and Guangzhou’s China Southern (GUN).

It also has a code share partnership with Taiwan-based, China Airlines (CHI). (ACN) has relationships with all of these carriers as well, but only on an interline basis. In addition, (WJI) has an interline relationship with Air China (BEJ).

News Item A-4: "Hainan Airlines Applies for Haikou - Chongqing - Rome Service" by Lena Ge, China Aviation Daily, February 19, 2016.

Hainan Airlines (HNA), China's 4th largest carrier, has filed an application with the Civil Aviation Administration of China (CAAC) to extend its Chongqing - Rome service to Haikou, Hainan Province starting March 2016.

Pending government approval, (HNA) will operate its Airbus A330/Boeing 767/787 airplanes on the Haikou - Chongqing - Rome service, with 2x-weekly, according to an announcement released on the website of the (CAAC) on February 18.

Hainan Airlines (HNA) officially launched the Chongqing - Rome route in April 2015, using a 242-seat Airbus A330-200 aircraft.

(HNA) plans to open a route from Beijing to Tel Aviv in April and Manchester in June, according to International Director, Li Xiang, as it speeds up international expansion as more Chinese citizens opt for outbound travel.

(HNA) opened Changsha - Los Angeles in January.

News Item A-5: Hainan Airlines (HNA) released a video (http://www.chinaaviationdaily.com/news/50/50691.html) of 2 cabin attendants guiding a dancing lion (a traditional costume for the New Year festivities) through Manchester, England. The video was also a tribute to a new route coming available in June 2016 (Beijing to Manchester and vice-versa).

News Item A-6: "HNA Group to Buy Ingram Micro for US$6 Billion"
By Sai Sachin R, Reuters, February 18, 2016.

Chinese aviation and shipping conglomerate, the (HNA) Group is buying electronics distributor Ingram Micro Inc for about US$6 billion, the latest in a string of overseas deals by Chinese companies.

The offer of US$38.90 per share from (HNA) unit, Tianjin Tianhai Investment Company Ltd represents a 31.2% premium to Ingram's closing price on February 17, 2016.

Shares of Ingram Micro, which distributes products ranging from Apple Inc's iPhones to Cisco's network equipment, were trading at $36.40 in after-hours trading.

Chinese companies have been aggressively splurging on foreign acquisitions to sidestep slowing domestic growth. The total value of Chinese outbound acquisitions topped US$1 trillion for the 1st time last year.

But some Chinese deals have hit a roadblock in the USA after the US Committee on Foreign Investment in the United States (CFIUS) raised concerns over national security.

Fairchild Semiconductor said on February 15 it had rejected an offer from China Resources Microelectronics Ltd and Hua Capital Management Company Ltd, citing concerns over the USA approval process.

Ingram said in a regulatory filing that Tianjin Tianhai will be required to pay the company a fee of US$400 million if the deal is terminated following a (CFIUS) investigation.

"I don't expect it would be a security concern, as Ingram Micro is a distributor of the equipment, and the vast majority of the products do not go to high-security customers," Northcoast Research analyst Keith Housum said.

The deal will help the (HNA) Group, the owner of China's Hainan Airlines (HNA) and the largest stockholder in Tianjin Tianhai, bolster its logistics arm with Ingram's supply chain network.

It will also give the company a stronger foothold in high-growth emerging markets through Ingram's large international presence.

As part of the deal, Ingram Micro will suspend its quarterly dividend payment and its share repurchase program, it said.

Morgan Stanley was financial adviser to Ingram Micro, while China International Capital Corporation Ltd and Bravia Capital were lead financial advisers for the (HNA) Group.

News Item A-7: Gogo has signed a term sheet with Beijing’s Shareco Technologies to install 2Ku in-flight connectivity on 50 commercial aircraft for Shareco’s airline partners, including Hainan Airlines (HNA) and Beijing Capital Airlines (DER).

March 2016: News Item A-1: Hainan Airlines (HNA) reported a 2015 net profit of +CNY3 billion/+$462 million in 2015, up +16% from a net income of +CNY 25.9 billion in 2014.

News Item A-2: Hainan Airlines (HNA), China's 4th largest carrier, has filed an application with the Civil Aviation Administration of China (CAAC) to launch a new international service linking Shenzhen and Auckland, New Zealand starting November 2016.

Pending government approval, (HNA) will operate its Airbus A330-200 on the Auckland service. The flight frequency has not been disclosed yet.

News Item A-3: China’s fast-expanding (HNA) Group, parent of Hainan Airlines (HNA), has launched a bid to buy Switzerland’s airline catering firm Gategroup Holdings. The deal is being recommended by the Swiss company’s board.

The CHF1.4 billion/$1.46 billion all-cash offer is the latest major Swiss acquisition by the Chinese aviation and shipping conglomerate, whose airline portfolio includes Hainan Airlines (HNA), Tianjin Airlines, and French carrier Aigle Azur (AZU).

Last year it acquired cargo handler Swissport International; other recent purchases have included Ireland-based lessor Avolon.

(HNA)’s offer for Gategroup is subject to a minimum 67% acceptance and to the approval of regulatory and competition authorities. If the offer is successful, Gategroup will be de-listed as a public company in Switzerland and operate as an autonomous unit within the (HNA) Group, which has pledged to retain the company’s headquarters in Switzerland.

The (HNA) Group has become one of China’s largest transport, logistics and services conglomerates.

News Item A-4: Azul Brazilian Airlines (AZL), the nation's 3rd largest airline, plans to transfer as many as 1,700 pilots (FC) to China's (HNA) Group, as part of its saving program, Folha de Sao Paulo reported on March 11.

According to the report, the (HNA) Group will introduce about 100 Brazilian pilots (FC) in the initial stage, for Hainan Airlines (HNA), Grand China Air (GCH), Tianjin Airlines (GCR), Lucky Air (LKY) and West Air (CHO). After 3 years' working in China, those pilots (FC) could decide to stay or leave for Brazil.

In addition, (AZL) is also planned to cut fleet capacity by -7% in 2016.

At the end of 2015, the (HNA) Group injected US$450 million into Brazil's third largest airline (AZL) for a 23.7% stake, a move it expects to expand its route network in South America, Africa, and Europe.

News Item A-5: "Hainan Airlines (HNA) Will Recruit 300 Foreign Flight Attendants" by Wang Wen, China Daily, March 18, 2016.

Hainan Airlines (HNA) launched its 2016 global recruitment on March 24 and said it plans to recruit 2,000 flight attendants (CA), including 300 foreigners this year.

(HNA) also expects to increase the percentage of foreign flight attendants (CA) to 30% in the next 3 years. "The recruitment of foreign flight attendants (CA) results from (HNA)'s expansion in the international market," said Wang Qindong, General Manager of (HNA)'s Human Resource (HR) & Administrative Department.

Wang said (HNA) will receive 25 new airplanes and open 14 new international routes in 2016, which demand more flight attendants (CA), especially foreigners.

In 2015, (HNA) recruited over >600 foreign flight attendants (CA) from 9 countries, including the UK, USA, Italy, and Russia.

News Item A-6: Grand China Aircraft Maintenance Company Limited (GCAM), a subsidiary of (HNA) Technic, received certification from the USA Federal Aviation Administration (FAA), covering full scope of Maintenance Repair & Overhaul (MRO) operations.

The company has become an (FAA) certified Repair Station, marking a step forward OF (GCAM)'s (MRO) level and an important milestone in the development of the (MRO) industry in the (HNA) Group.

(GCAM), based in Haikou, China, provides aircraft repair, maintenance, and overhaul (MRO) services. Following the (FAA) certification, (GCAM) will continue to develop and expand its maintenance capability and pursue additional certifications from other national authorities.

News Item A-7: The 1st aircraft for Air Guilin, a startup subsidiary of the (HNA) Group, touched down at Guilin Liangjiang International Airport at 12:00 pm on March 11 after a 2-hour delivery flight from Haikou.

The A319 (B-6192) - see photo - "HNA-2016-03 - Air Guilin A319.jpg," was transferred from another (HNA) Group affiliate Beijing Capital Airlines (DER). The aircraft is now grounded at Guilin Airport, with no flight plan available.

Backed with 600 million yuan in initial start-up capital, Air Guilin is a joint venture (JV) between the Guilin Tourism Development Company (60%) and (HNA) Group subsidiary, Guilin Aviation Tourism Group (40%). Based at Guilin Liangjiang International Airport, the new airline is licensed for domestic cargo & passenger air transportation business, using Airbus A319 aircraft.

May 2016: News Item A-1: "China’s HNA Group to Buy a 13% Stake in Virgin Australia" by (ATW) Katie Cantle, May 31, 2016.

China’s (HNA) Group is expected to make an investment of A$159 million/$114 million) to buy a 13% stake in Virgin Australia (VOZ) for A$0.3 per share in an effort to enhance its position in the fast growing Sino-Australia market.

The (HNA) Group would nominate a Director to the Virgin Australia Group board after the deal is complete at the end of June. The deal still needs approval from Chinese aviation authorities and the Australian Competition & Consumer Commission.

In addition to equity investment, both carriers also signed an agreement to form a strategic alliance to cooperate on code sharing, frequent flyer programs, lounge access, and promotion of tourism and business travel.

According to a written statement released by (VOZ), the (HNA) Group intends to increase its stake to 19.99% in the coming days. “We are excited to support the Virgin Australia Group through our investment and the strategic alliance. We look forward to working together to create a seamless travel experience between Australia and China, and to deliver further choice, value and excellence to travelers worldwide,” the (HNA) Group noted.

Virgin Australia Group (CEO) John Borghetti said: “In 2015, >1 million Chinese travelers visited Australia, spending approximately A$8.3 billion in total on their journeys. By 2020, almost 1.5 million Chinese travelers are projected to visit Australia in a market expected to be worth up to A$13 billion. We are pleased to welcome (HNA) as a new shareholder and strategic alliance partner. The alliance will see us leverage the opportunities offered by China, as well as the synergies of (HNA)’s comprehensive aviation supply chain.”

China Southern (GUN) is the biggest carrier on Sino-Australia routes. China Eastern (CEA) established a strategic alliance with Qantas (QAN) to coordinate pricing and scheduling on Sino-Australia routes. Hainan Airlines (HNA), the subsidiary of the (HNA) Group opened a seasonal Xi’an - Sydney route and plans to add new Xi’an - Melbourne and Changsha - Melbourne services this year. Another subsidiary, Qingdao Airlines, also plans to open a new Qingdao - Melbourne route.

Launched in 2000, Virgin Australia (VOZ) is the 2nd largest carrier in Australia with close to a 36% share of the Australia market. Singapore Airlines (SIA) received the green light from the Foreign Investment Review Board to boost its stake to 25.9% in Virgin Australia (VOZ), while Etihad Airways (EHD) holds a 25.1% stake in (VOZ). Air New Zealand (ANZ) is the largest shareholder with 25.9%, but is looking to sell its shares in Virgin Australia (VOZ).

The (HNA) Group is accelerating its international expansion pace. It agreed to buy a 23.7% stake in Azul Brazilian Airlines (AZL) for $450 million in November 2015. Earlier in May 2016, the (HNA) Group announced it would buy an initial 7% stake in Atlantic Gateway, a private consortium that owns 50% of (TAP) Portugal. This could raise a stake that could reach up to 20% in (TAP).

News Item A-2: Hainan Airlines (HNA)'s 1st Boeing 787-9 Dreamliner (B-7880) has completed its 1st flight.

(HNA) is expected to take delivery of its 1st 787-9s in June, with +7 more pending delivery later this year.

Besides Hainan Airlines (HNA), 2 other Chinese airlines will become 787-9 operators in 2016: - Air China (BEJ) is scheduled to receive its 1st in May followed by Xiamen Airlines (XIA) in December.

June 2016: China’s (HNA) Group is continuing its flurry of airline and aviation acquisitions, entering exclusive talks to buy 49.99% of Air France (AFA)’s Servair catering arm.

Over the last year, the (HNA) Group has acquired (or entered talks to acquire) a 13% stake in Virgin Australia (VOZ), 7% of Atlantic Gateway (which owns 50% of (TAP) Portugal), 23.7% of Brazilian carrier Azul (AZL), Irish lessor Avolon (AVL), cargo handler Swissport International, and catering firm, Gategroup Holdings.

Air France (AFA) said it had received “several offers” for Servair, but it has entered exclusive negotiations with the (HNA) Group, which would take operational control as part of the deal.

If (HNA) succeeds in its April 11 offer for rival caterer, Gategroup, the addition of Servair would create a business with >200 facilities and 39,000 employees.

(HNA)’s bid values Servair at €475 million/$529.6 million. “The relevant works councils within the Air France (AFA) - (KLM) group will be informed and consulted on the proposed transaction,” Air France (AFA) said.

As of December 2015, the (HNA) Group had a fleet of >820 aircraft, serving nearly 700 domestic and international routes. As well as flagship carrier, (HNA), it has interests in Aigle Azur (AZU), Africa World Airlines, Beibu Gulf Airlines, Capital Airlines, Deer Jet (DER), Fuzhou Airlines, Guilin Airlines, Lucky Air, My CARGO, Tianjin Airlines, Urumqi Air, West Air, and Yangtze River Airlines.

June 2016: News Item A-1: Hainan Airlines (HNA) is aiming to return to the Africa/Middle East market with the relaunch of the Beijing - Cairo route in December, according to the Civil Aviation Administration of China (CAAC).

(HNA) plans to fly an Airbus A330 on the 3x-weekly service. The last time it operated this route was in 2012.

(HNA) used to operate Beijing - Dubai - Khartoum (Sudan) and Beijing - Abu Dhabi - Luanda (Angola) service, but suspended the routes because of operating losses and the unstable political situation.

However, Hainan Airlines (HNA) still showed an interest in the Africa/Middle East market in 2012, when it launched Ghana’s Africa World Airlines (AWA), a joint venture (JV) with the China-Africa Development Fund, Ghana (SAS) Financial Group, and Ghana Social Security & National Insurance Trust.

As part of Beijing’s national “one belt, one road” policy in recent years, Chinese carriers have again begun exploring the Africa/Middle East market.

News Item A-2: Manchester became the 2nd UK airport to be served non-stop from Beijing with the introduction on June 10 2016 of Hainan Airlines (HNA)’s new 4x-weekly A330-300 service. London Heathrow (LHR) is already served by Air China (BEJ) (2x-daily) and British Airways (BAB) (daily).

News Item A-3: Chinese carriers reported a collective net profit of +CNY32.03 billion/+$4.86 billion in 2015, up +75.1% over the net income of CNY18.29 billion in 2014 in the face of “the slowdown of global economic growth” and “mounting domestic economic downward pressure,” according to Civil Aviation Administration of China (CAAC).

Industry analysts credited “lower fuel price” and “continuous robust growth of market demand, especially market demand on international routes” as the main reasons for domestic airlines’ much improved performance.

Chinese carriers transported a total of 436.18 million passengers, up +10.6% over 2014. Average passenger load factor increased by +0.7 points to 82.1% LF. Cargo traffic volume jumped +5.9% to 6.293 million tonnes.

Domestic airlines took delivery of +280 more new aircraft in 2015, expanding the total fleet to 2,650 aircraft as of December 31, 2015.

China’s 4 major carriers all reported big profit increases in 2015. Air China (BEJ) has reported a 2015 net profit of +CNY6.77 billion/+$955 million, up +77% compared to net income of +CNY3.82 billion in 2014, while China Eastern Airlines (CEA) reported a net profit of +CNY4.54 billion/$64 million in 2015, up +33% compared to net income of +CNY3.42 billion in 2014. China Southern Airlines (GUN) reported a net profit of +CNY3.85 billion/+$593 million in 2015, more than doubled from a net income of +CNY1.77 billion in 2014. Hainan Airlines (HNA) reported a 2015 net profit of +CNY3 billion/+$462 million in 2015, up +16% from a net income of +CNY2.59 billion in 2014.

July 2016: News Item A-1: Hainan Airlines (HNA) plans to take a 23% shareholding in (TAP) Portugal, with a bond buy from Azul Brazilian Airlines (AZL), in a €30 million/$33 million transaction.

(HNA) intends to buy the stake in (TAP) through the purchase of 25% convertible bonds from (AZL), the Brazilian low-cost carrier (LCC). (AZL) bought $100 million of bonds from (TAP) in March 2016, giving it a 40% potential interest in (TAP), the Portuguese flag carrier.

This latest move bolsters (HNA)’s presence in both the European and South American markets, following the purchase of a 23.7% stake in (AZL) for $450 million in November 2015, and a 7% stake in the Atlantic Gateway consortium (a part-owner of (TAP)).

(HNA)’s latest investment in (TAP) gives it a 13.06% economic interest in (TAP), according to the Shanghai Stock Exchange statement, along with voting power on the (TAP) board from a seat on the 12-person Director’s list.

News Item A-2: "(HNA) Takes Majority Stake in SR Technics."

China’s (HNA) Aviation has agreed to buy a majority stake in SR Technics (SWS) from sole shareholder, Mubadala.

The deal was announced on July 15 and will see (HNA) take an 80% stake in the Swiss Maintenance Repair & Overhaul (MRO) organization, which will remain a standalone operation.

Mubadala, Abu Dhabi’s investment and development company, which has held its majority stake in SR Technics (SWS) for >6 years, will retain a 20% share of (SWS).

Chen Wenli Vice Chairman of the (HNA) Group, said: “(HNA) fully supports the existing long-term strategy and executive management team, and will be a reliable partner to support SR Technics (SWS)’ focus on continuing to deliver value to its existing customers, and expanding its global (MRO) business.”

While Chinese companies buying up overseas firms has become a common occurrence in the past 10 years, (HNA) has had its eyes on Switzerland lately, with the company also set to snap up Swiss flight services specialist, Gategroup for $1.5 billion in addition to SR Technics (SWS).

Further (HNA) acquisitions in the aviation sector could be on the cards, with Group Chairman Chen Feng telling the "Financial Times" earlier in July that he is looking to do more takeovers despite China’s economy stalling in the past year.

While the purpose of (HNA)’s acquisition is obvious, 1 has to ponder why Abu Dhabi government-backed Mubadala is selling its majority share in SR Technics (SWS). (SWS) has performed strongly in recent years and possesses a strong airline customer base. This was further buoyed by last year's $150 million contract to provide component support for Etihad (EHD)’s fleet of 787 airplanes.

According to "Bloomberg," Mubadala’s decision to relinquish its majority stake and become a minority shareholder could lie in the global oil price slump, which reportedly led to the state investment group starting proceedings to offload its Swiss asset in February.

But considering that Mubadala unveiled a partnership with Rolls-Royce (RRC) to establish an approved maintenance center in Abu Dhabi for the (Trent XWB) engine maintenance as part of an existing, long-term aerospace strategy for the (UAE) state, its (MRO) activities are clearly far from done.

News Item A-3: China’s (HNA) Group subsidiary, Tianjin Airlines (GCR) plans to expand its long-haul Airbus A330 fleet to 10 aircraft as it accelerates its international expansion pace.

(GCR) President Liu Lu said (GCR) plans to open more international routes to Los Angeles, San Francisco, Vancouver, Melbourne, Auckland, and other European cities over the next 5 years.

(GCR) operates 1 A330 leased from Hainan Airlines (HNA). It is expected to introduce +2 A330s this year.

Launched in 2009, Tianjin Airlines (GCR) is formerly a regional carrier that operated only Embraer E190s and E195s. In 2011, it introduced A320s on trunk routes to slow operating losses.

(GCR) operates a fleet of nearly 90 aircraft, including A320s and E190s/E195s on >160 domestic routes and 15 international routes. In 2015, Tianjin transported >10 million passengers.

As more Chinese passengers travel internationally, more domestic airlines are speeding up their international expansion paces. Liu said (GCR) plans to build Tianjin as the 2nd access to Beijing to take more international growth opportunities.

Tianjin opened 4 international routes in June, which include Tianjin - Chongqing - Phuket, Tianjin - Moscow, Tianjin - Vlapostok and Tianjin - Chongqing - London.

Tianjin phased out 10 E190s in its joint venture with Beibu Gulf Airlines, which was launched in conjunction with Guangxi Beibu Gulf Investment Group, and retired some ERJ-145s to Hainan Airlines.

August 2016: News Item A-1: Beijing Capital Airlines (DER) will begin 3x-weekly Hangzhou - Vancouver, Canada services on December 30, marking the western Canada city as the first North American destination for the (HNA) Group subsidiary airline.

The Airbus A330-200 service will fly Wednesday, Friday and Sunday from Hangzhou Xiaoshan International Airport (HGH) via Qingdao Liuting International Airport (TAO). The aircraft will be configured for 222 passengers, with 36C seats in business class and 186Y seats in economy.

Hangzhou is the capital city of Zhejiang province on China’s east coast. Qingdao is a port city in northeast China’s Shandong province.

Beijing Capital Airlines (DER), a subsidiary of Hainan Airlines (HNA), will be the 6th airline from mainland China flying to Vancouver International Airport (YVR). The airport has seen 10,475,024 passengers in 2016 through June, up +8.1% year-over-year (YOY), and registered 135,354 commercial airplane movements, down -0.7% (YOY). Asia-Pacific passengers year-to-date at (YVR) have risen +12.9% (YOY) to 1,622,191 passengers as of June 30.

Beijing Capital Airlines (DER) flies an all-Airbus (EDS) fleet of 67 aircraft from its core bases in Beijing, Guangzhou, Shenyang, Xi’an and Hangzhou to cities across China and international destinations in Asia, Europe, and North America.

“(DER) obtained (IOSA) accreditation this May and officially became an (IATA) member,” Beijing Capital Airlines (DER) (CEO) Xu Xin said August 17. “This proves that our continuous efforts in raising our operation safety standard have been recognized by international aviation organizations. Our network [will now extend] to North America via Vancouver.”

News Item A-2: 737-84P (41390, B-7618), 737-86N (60691, B-7639), (GECAS) (GEF) leased, 787-9 (62714, B-7839), delivery.

September 2016: News Item A-1: Hainan Airlines (HNA) has reported a 1st-half net profit of +CNY1.67 billion/+$227 million, up +4.4% over a net income of +CNY1.6 billion in the year-ago period.

1st-half operating revenue jumped +14.3% year-over-year to CNY19 billion, while operating expenses climbed +14.2% to CNY14 billion.

Industry analysts credited market demand growth and lower fuel prices as the main reasons for the improved performance.

Passenger boardings rose +20.4% to 22.32 million in the year’s 1st half with an average load factor of 88.2% LF, down -0.4 point over the year-ago period. 1st-half passenger traffic grew +22.8% to 38.67 billion (RPK)s against a +23.4% increase in passenger capacity to 43.87 billion (ASK)s. Cargo traffic volume increased +10.13% to 200,759 tonnes.

(HNA) introduced 9 airplanes and phased out 5 airplanes in the 1st half. (HNA) operated a total fleet of 206 airplanes, comprising 16 737-700s, 147 737-800s, 3 767-300s, 10 787-8s, 1 787-9, 3 A319s, 4 A320s, 8 A330-200s and 14 Airbus A330-300 as of June 30.

News Item A-2: "(EC) Approves (HNA) Group Acquisition of Gategroup"
by (ATW) Victoria Moores, Victoria.moores@penton.com, September 21, 2016.

The European Commission (EC) has given approval for Chinese firm the (HNA) Group, the parent of Hainan Airlines (HNA) to acquire Swiss airline catering firm, Gategroup Holdings. “The (EC) concluded that the proposed acquisition would raise no competition concerns,” the anti-trust regulator said.

The (HNA) Group announced it would launch a bid for Gategroup in April. It acquired 61.7% of the company in July and later that month upped its stake to 96.1%.

Gategroup provides catering and on board retail services and (to a lesser extent) is involved in related activities, such as on board equipment, supply chain logistics and airport lounge management.

The (HNA) - Gategroup deal is the latest in a series of overseas acquisitions that Chinese companies (and particularly (HNA)) have undertaken in recent months.

October 2016: "Avolon to Acquire (CIT) Group’s Leasing Business" by
(ATW) Victoria Moores Victoria.moores@penton.com, October 6, 2016.

Avolon (AZV) has agreed to acquire USA company the (CIT) Group (TLS)’s leasing business for $10 billion, creating the world’s 3rd largest lessor with a fleet of 910 airplanes worth >$43 billion.

Announcing the agreement October 6, (AZV) detailed plans to acquire the (CIT) Group’s leasing business, which includes 334 owned and managed airplanes, plus a further +133 airplanes on order or committed.

“(AZV) will acquire total assets of $11.1 billion as of June 30, 2016 and associated liabilities. (AZV) will pay $10 billion, a premium of 6.7% to the June 30th 2016 net asset value (NAV) of $9.4 billion. The purchase price is subject to adjustment for changes in (NAV) between June 30 2016 and the closing date of the transaction.”

Together, the 2 lessors have an in-service fleet of 561 airplanes, plus orders and commitments for a further +349. This figure includes 282 “new technology” airplanes, comprising 195 from Airbus (A320neo family, A330neo and A350), 59 Boeing 737 MAXs, and 28 787s.

The acquisition will expand Avolon (AZV)’s customer base by 69 airlines in 20 countries, taking the leasing giant to a total of 154 customers in 61 countries.

(AZV) said the fleet will be spread in thirds across the Americas, (EMEA) and Asia-Pacific regions, providing balanced geographic exposure. This will “drive growth and balanced, risk adjusted returns,” the lessor said.

Since launching in 2010, Avolon (AZV) has undergone a rapid expansion. The deal will quadruple (AZV)’s size, compared with 10 months ago when it was acquired by the (HNA) Group’s Bohai Leasing.

The (HNA) Group outlined its ambition move from 4th to 3rd place among global lessors by asset value in June, and had hinted that (CIT) Aerospace could be a potential acquisition target.

Avolon (AZV) is now aiming to become the global number one in aircraft leasing, taking the top spot from Netherlands-based AerCap (DEA). “From a standing start, we will have built (AZV) into a leading global player in 6 years,” (AZV) (CEO) Dómhnal Slattery said. “While this transaction is strategically compelling and will double the scale of (AZV), it is not the summit of our ambition.”

The deal, which remains subject to Bohai shareholder and regulatory approvals, is expected to close in the 1st quarter of 2017.

November 2016: News Item A-1: Hainan Airlines (HNA) reported a 3rd-quarter net profit of +CNY1.7 billion/+$251 million, nearly doubled from a net income of +CNY887.3 million in the year-ago quarter. Operating revenue climbed +18.1% to CNY11.8 billion against a +5.3% increase in operating expenses to CNY9.9 billion. Industry analysts cited continuous market demand growth and lower fuel prices as the main reasons for (HNA)’s much-improved performance.

China’s "big 3" carriers also posted 3rd-quarter net profit gains: China Southern (GUN) reported a 3rd-quarter net profit of CNY3.3 billion, nearly tripled from the year-ago quarter. Air China (BEJ) reported a net profit of +CNY3.8 billion, up +62% year-over-year while China Eastern (CEA) reported a 3rd-quarter net profit of +CNY3.5 billion/+ $517 million, up +95.5% from the year-ago quarter.

For the 1st 9 months of 2016, (HNA) posted a net income of +CNY3.4 billion, up +36.7% from a net profit of +CNY2.5 billion in the same period last year. Operating revenue jumped +15.7% to CNY30.8 billion, while operating expenses increased +11.3% to CNY27.4 billion.

News Item A-2: Hainan Airlines (HNA) announced on November 28 that its subsidiary, Yunan Lucky Air (LKY) is planning to set up a new carrier in Chengdu, capital city of SW China's Sichuan Province.

Lucky Air (LKY) will partner with local state-owned companies to invest 3 billion yuan in the new Chengdu Shenniao Airlines, which could become the 8th base carrier at Chengdu Shuangliu International Airport following Air China (BEJ) Southwest Brance, Sichuan Airlines (SIC), Chengdu Airlines, Tibet Airlines (TBZ), China Eastern Airlines (CEA) Sichuan, Shenzhen Airlines (SHZ) and Lucky Air (LKY).

(LKY), the Kunming-based carrier expects to invest up to 1.05 billion yuan in the joint venture (JV) and will own up to 35%. Yunnan Xiangpeng Investment Company, Ltd and Chengdu Communications Investment Group Company, Ltd. will hold 45% and 20% stakes in the new airline with 1.35 billion yuan and 600 million yuan, respectively.
Based at Chengdu Shuangliu International Airport, the proposed airline will be a low cost carrier (LCC) operating domestic and international flights.

Hainan Airlines (HNA) said that the new proposed Shenniao Airlines aims to enhance its presence in Sichuan Province and increase its market shares in the region, so as to make profits. Shenniao Airlines becomes the latest in a series of new Chinese airlines launched by the (HNA) Group in recent years. Others include Fuzhou Airlines (FZH) in Fujian province, Urumqi Airlines (URQ) in the Xinjiang region, and GX Airlines (GXB) in Guangxi region. It has also created a new passenger airline in Shanghai, with the expansion of former cargo carrier Yangtze River Airlines (YTH).

* "China’s Lucky Air plans to launch (LCC) in Chengdu" by (ATW) Katie Cantle, November 30, 2016.

Hainan Airlines (HNA)’s low-cost carrier (LCC) subsidiary, Lucky Air (LKY) plans to launch a low-cost carrier (LCC) in the Sichuan Province capital of Chengdu in an effort to explore the market potential of SW China.

The new venture will be named "Shen Niao Airlines" and is expected to have a registered capital of CNY3 billion/$435 million. (LKY) will hold a 35% stake with a CNY1.05 billion investment, Lucky Investment Company will hold a 45% stake with a CNY1.35 billion investment, and Chengdu Communications Investment Group will hold a 20% stake with an investment of CNY600 million. Kunming-based (LKY) is making various preparations to establish the new entity and there is no formal launch date.

Hainan Airlines (HNA) said the move would help (LKY) enhance its position in Sichuan. (LKY) launched its own branch company in Chengdu in 2014.

Chinese carriers are seeking a deeper foothold in Chengdu as its new airport, Tianfu International, is scheduled to complete construction in 2019 and go into formal operation in 2020. The airport costs about CNY70 billion and is expected to handle 40 million passengers, 700,000 tonnes cargo goods and 320,000 aircraft movements annually by 2025.

Air China (BEJ) and Sichuan Airlines (SIC) are the dominant player of Sichuan market but China Eastern (CEA), Shenzhen Airlines (SHZ), Tibet Airlines (TBZ) and Chengdu Airlines (UEG) have all set up their own branch companies in Chengdu. China Southern (GUN) also plans to launch its branch company in Chengdu soon.

News Item A-3: "China's (HNA), Abu Dhabi Fund Mubadala to Partner on Investments" by Tom Arnold, "Reuters" November 28, 2016.

China's (HNA) Group, owner of Hainan Airlines (HNA), and Abu Dhabi state investor Mubadala Development Company said on November 28, they would invest together in tourism, logistics and financial services. They will also look at areas including aerospace, advanced manufacturing, real estate and healthcare, they said in a joint statement.

(HNA), a shipping and airlines conglomerate with >US$90 billion of assets, began a commercial relationship with Mubadala in July when Mubadala agreed to sell a majority stake in SR Technics (SWS), a civil aviation business, to (HNA).

Mubadala retained 20% of SR Technics (SWS).

In an effort to strengthen its ties to the Gulf, (HNA) in September 2015 announced plans for an Islamic financing deal, although it has not yet announced completion of the deal. Mubadala, which is merging with fellow state fund International Petroleum Investment Company, has stakes in companies across the world. Mubadala had 246.4 billion dirhams/US$67.1 billion of assets at the end of 2015.

News Item A-4: Chinese carriers have accelerated their international expansion pace as outbound travel continues to grow.

In October, Beijing-based Air China (BEJ) experienced a +18.6% year-over-year (YOY) growth in (RPK)s on international routes. Shanghai-based China Eastern (CEA) reported a +30.4% (YOY) growth; Guangzhou-based China Southern (GUN) posted a 23.9% (YOY) growth; and Haikou-based Hainan Airlines (HNA) saw a 47.4% (YOY) growth.

Air China (BEJ) transported 11.2 million passengers on international routes in October, up +23.2% (YOY); China Eastern (CEA), 12.1 million, up +17.2% (YOY); China Southern (GUN), 11.6 million, up +19.1% (YOY); and Hainan Airlines (HNA), 18.7 million, up +57% (YOY).

In September, domestic airlines transported 4.2 million passengers on international routes, up +19.9% (YOY), which outpaced a +13% growth on domestic routes.

Hainan (HNA) opened 2x-weekly Xi'an - Sydney and Changsha - Sydney routes in September and 2x-weekly Haikou - Da Nang services in October.

China Eastern (CEA) opened 13 international routes in the (1H) and +2 European routes to St Petersburg and Madrid, in addition to boosting flight frequencies on routes to Europe and the USA.

Industry analysts point out domestic airlines still need to face severe challenges including overcapacity; shortage of slots and aviation professionals, such as pilots (FC) and Maintenance Repair & Overhaul (MRO) (MT) staff; and should focus more on profits than market shares, when they speed up their international expansion pace.

December 2016: News Item A-1: "(HNA) Group Hopes to Enter Top 10 on "Fortune" List" by CRIENGLISH.com December 27, 2016.

The (CEO) of the company which owns Hainan Airlines (HNA) is boldly predicting his company might be able to crack the "Fortune 500's" top-10 in the coming 10-years. Huang Qijun has made the suggestion after (HNA)'s parent company, the (HNA) Group, managed to make the list this year, ranked 353. "We will continue to try to purchase A-list companies to make us stronger. This will also enable us to make better use of corporate synergy to help us become a truly global business group more quickly. We will continue to work alongside with our Chinese counterparts to contribute more to the whole industry."

Hainan Airlines (HNA) started out in 1993 with registered capital of just 10-million yuan. It took the local airliner just over >2-decades to become a global leader, with the (HNA) Group now holding assets worth some 600 billion yuan.

(CEO) Huang Qijun admits the early days for his company were all about surviving. "In the beginning, we just tried to perfect our services and built the brand, all for the purpose of surviving in the market. But then, in 2003, we were able to find a way to start expanding our business strategy beyond mere survival. At that time, we began to diversify our business, opening more airport hotels around the country. Then the global market became our strategic priority in 2010. We were lucky at that time, as the markets were not nearly as competitive as they are today. Local businesses were more enthusiastic about accepting Chinese investment."

Hainan Airlines (HNA) parent, the (HNA) Group, now operates businesses in nearly 60 countries, employing close to 90-thousand people.

News Item A-2: Hainan Airlines (HNA) launched a nonstop service between Guangzhou and Nha Trang, Vietnam on December 26. The inaugural flight HU441 took off from Guangzhou Baiyun International Airport at 8:55 am and landed at Nha Trang International Airport at 10:30 pm, local time.

(HNA) flies Boeing 737-800s between Guangzhou and Nha Trang, with (5x-weekly).

It is (HNA)'s 2nd international route in Guangzhou, following its Guangzhou - Danang. (HNA) will compete with China Southern Airlines (GUN) on the route.

News Item A-3: Hainan Airlines (HNA) is applying to the USA Department of Transportation (DOT) to open 2 Sino to USA routes (from Chengdu to Los Angeles and New York) as China’s outbound travel continues to grow.

(HNA) has received approval from the Civil Aviation Administration of China (CAAC) to operate the 2 new routes. It plans to open 2x-weekly Chengdu to Los Angeles service in the 1st quarter of 2017 and 3x-weekly Chengdu to New York service in the 2nd quarter. Both routes will use the Boeing 787.

Sichuan Airlines (SIC) has also applied to the (CAAC) to open the same 2 routes in August 2017 using an Airbus A350. (SIC) plans to introduce Chengdu to New York service next year.

(HNA) is expected to face stiff competition on Sino to USA routes. In 2014, Chicago-based United Airlines (UAL) opened a Chengdu to San Francisco route; China Eastern Airlines (CEA) opened Chengdu to Nanjing to Los Angeles service in 2015; and Sichuan Airlines (SIC) opened Chengdu to Hangzhou to Los Angeles in October 2016.

(HNA), which is speeding up its international expansion pace, has also applied to the (CAAC) to take over the Chengdu to London route, which will be suspended by British Airways (BAB) on January 13, 2017.

News Item A-4: "Yangtze River Airlines Eyes International Expansion"
by (ATW) Katie Cantle, December 16, 2016.

(HNA) Group subsidiary, Yangtze River Airlines (YTH) looks toward international expansion in 2017 as China’s outbound passenger travel continues to grow. (YTH), the Shanghai-based carrier plans to take delivery of 2 Boeing 787s, which Hainan Airlines (HNA) expects to introduce in 2017. (HNA) raised its stake in Yangtze River Airlines (YTH) from 0.37% to 11.6% in July.

Last year, (YTH) was transformed from Yangtze River Express, a cargo carrier that launched in 2002, and operated a fleet of 23 freighters on >40 domestic and international routes.

Yangtze River Airlines (YTA) currently operates 6 Boeing 737-800 passenger airplanes on 21 domestic routes. It established Shanghai as its main operating base and Shenzhen as another domestic base with passenger boardings of 600,000.

By 2020, (YTA) plans to expand to 35 passenger aircraft and transport 6.6 million passengers.

News Item A-5: "(HNA) Belt & Road Routes to Rise" by Ma Zhiping, and Zhu Wenqian, "China Daily" December 27, 2016.

The parent of Hainan Airlines (HNA) is to help other carriers build and manage airports and facilities as well. The (HNA) Group, the parent company of Hainan Airlines (HNA), plans to play a bigger role in advancing transportation services next year for multilateral cooperation in countries along the "Belt & Road Initiative" areas, its (CEO) Huang Qijun said.

"We will launch more routes connecting China with the Belt & Road countries, help our counterparts build and manage airports to improve local transportation services and introduce high-end tourism routes with distinguished "Silk Road" features," Huang said.

3 years ago China President Xi Jinping proposed the Belt & Road Initiative, which includes the Silk Road Economic Belt, and 21st Century Maritime Silk Road, to promote multilateral development of the linked regions. The initiative has since witnessed tangible commitments by China, including the launch of a New Silk Road Fund worth US$40 billion in late 2014.

"Infrastructure is the key to successful implementation of the initiative. (HNA) will actively engage itself in helping address problems such as under-investment in aviation facilities in the Belt & Road areas," said (HNA)'s Huang.

(HNA) operates 1,250 aircraft, on about 1,000 routes connecting >260 cities around the globe. Haikou-based (HNA), which made its 1st flight in 1993, has become a transnational giant boasting 600 billion yuan/US$86.34 billion of assets and about 200,000 employees at home and abroad, according to data from the company.

"With a diversified structure, (HNA)'s business now ranges from aviation, finance, real estate, logistics, hospitality and tourism and ecological technology. It was ranked No 353 of Fortune's 500 companies in 2015," Huang said.

He said Hainan Island was a vital supporting point for the Belt & Road countries. The group would, he said, further strengthen the capacity of Haikou Meilan International Airport as an international hub to better link with countries in Africa and the South Pacific.

"We will also help upgrade the infrastructure and services levels of the aviation, tourism, hotels, cruisers, and duty free service sectors of Hainan as a top international resort," Huang said.

As per the latest official estimates, the total number of tourists in Hainan was expected to reach 60.3 million in 2016, an increase of 13% on 2015. "The Hainan provincial authorities are conducting feasibility studies on developing a free trade zone with (ASEAN) countries," Huang said. "(HNA), the Chinese enterprise behind Hainan airline, will make its best efforts to help promote the plan."

He Dongni, VP of the Haikou-based China Institute of Reform & Development, said (HNA) had won international recognition by developing a diversified business model and through timely acquisitions of a string of overseas assets which highlighted its localized management. (HNA)'s practice had set a good example for Chinese enterprises in going global. "Especially its innovations in the application and drafting of standards, upgrading of technologies, management, services, green development concepts and performance in conducting social corporate responsibilities," he said. The group had a strong advantage in playing a leading role in contributing to the Belt & Road Initiative projects, he added.

News Item A-6: The (HNA) Aviation Group has signed an agreement with global technology group Sabre Corporation in an effort to enhance (HNA)’s operating efficiency and bring about more revenue opportunities. “The (HNA) Aviation Group holds/controls some stakes in the (HNA) Group’s 18 airline subsidiaries, which has laid a foundation for our cooperation with Sabre,” (HNA) Tourism Group (COO) Xie Haoming said. “The industry-leading solutions that Sabre has developed will make our airlines more efficient and profitable, and will enable us to better service our customers.”

According to the agreement, Sabre will provide (HNA) Aviation Group carriers with AirVision Planning & Scheduling, as well as AirCentre Movement & Recovery Manager.

Sabre Airline Solutions President Hugh Jones noted, “China is a critical aviation market for Sabre because of its rapid growth. With that growth comes an increase in operational complexities. Our technology will help with that complexity and will allow (HNA)’s airlines to compete more effectively in a very competitive global environment.”

January 2017: News Item A-1: Hainan Airlines (HNA) is applying to the USA Department of Transportation (DOT) to open routes this year from Chongqing to Los Angeles in the 1st quarter and New York (JFK) in the 2nd quarter. (HNA) plans to operate these 2 routes 8x- or 9x-monthly using a Boeing 787. The 2 routes have been approved by the Civil Aviation Administration of China (CAAC), which may mean a lost opportunity for Air China (BEJ), which also applied to the (CAAC) to operate Chongqing to Los Angeles service, as typically only 1 Chinese carrier can operate 1 international route in China.

With China’s fast-growing outbound passenger travel to the USA, last month Hainan Airlines (HNA) applied to the (DOT) to open 2x-weekly Chengdu to Los Angeles 787 service in the 2017 1st quarter and 3x-weekly Chengdu to New York 787 service in the 2nd quarter.

In November 2014, the USA and China relaxed new visa regulations, which increased Sino to USA travel. However, an industry source said that carriers on the routes are suffering from overcapacity, making it difficult to turn a profit. Because (HNA) does not have a major hub compared to China’s big 3, (HNA) has adopted an international strategy of operating from China’s secondary cities to primary foreign cities and vice versa.

In 2016, (HNA) opened 10 intercontinental routes, which included 7 routes departing from Chinese secondary cities (ie: Chongqing, Xi’an, Changsha and Haikou), and only 3 intercontinental routes from Beijing.

News Item A-2: Chinese conglomerate the (HNA) Group is in final talks to buy Frankfurt-Hahn Airport in western Germany. According to the airport’s federal state owners Rhineland Palatinate, the (HNA) Group teamed up with German company (ADC) for the bid. 3 bids had been received in the latest sale process and, after auditors reviewed the offers, decided to enter into final-stage negotiations with (ADC) and (HNA).

Rhineland Palatinate said on its website that an intensive coordination with the European Commission (EC) is also necessary to meet competition requirements.

It is Rhineland-Palatinate’s 2nd attempt to sell the loss-making Hahn airport. In 2016, a deal with Chinese aviation and logistics group Shanghai Yiqian Trading Company collapsed after the bidder failed to make any payments after agreeing to a purchase price of €13 million/$14 million. Rhineland Palatinate owns an 82.5% stake in the former military base, with the rest owned by the neighboring state of Hesse.

Hahn Airport is a 24-hour operating facility, but made a loss of €17 million in 2015, the German daily "Handelsblatt" reported. The airport opened for civil operations in 1993.

The airport is used mainly by freight and low-cost carriers, with Ireland’s Ryanair (RYR) and Hungary’s Wizz Air (WZZ) its 2 largest operators. In 2015, the airport handled 2.7 million passengers, slightly up on 2014’s figure of 2.4 million, but substantially down on its high-water mark of 4 million in 2007.

The planned (HNA) airport deal is the latest in a series of overseas acquisitions that Chinese companies have undertaken in recent months.

In October 2016, the (HNA) Group acquired Maintenance Repair & Overhaul (MRO) provider (SR) Technics (SWS).

Chinese buyers have spent substantial sums over the past few years buying up major pieces of Western aviation infrastructure, including airlines, airports and support services.

787-9 (62718, B-6998) Charleston #159 delivery.

February 2017: News Item A-1: Hainan Airlines (HNA) announced February 3rd that it has completed acquisition of a 48.21% stake in subsidiary Tianjin Airlines (GCR), paving the way for all its subsidiaries to be listed as a whole entity.

According to the Shanghai Stock Exchange, (HNA), the Haikou-based carrier has paid 5.55 million yuan to become a controlling stakeholder of (GCR). After the deal, the shareholding structure of Tianjin Airlines (GCR) turned out to be 87.27% held by Hainan Airlines and 12.72% held by 2 Tianjin-based investment companies. Meanwhile, the registered capital of (GCR) will be increased to 8.19 billion yuan.

Based in Tianjin, (GCR) has the geographic advantage and good route resources, which help it make great development with the integration of Jing-jin-ji area. Meanwhile, the capital increase in (GCR) will optimize the income structure of the unit and benefit to Hainan Airlines (HNA)'s long-term development.

As of December 31, (GCR) had accumulated 1.3 million flying hours and transported around 60 million passengers totally. In 2016, (GCR) operated >250 routes to 120 international and domestic destinations.

News Item A-2: Hainan Airlines (HNA) has filed an application with the Civil Aviation Administration of China (CAAC) to add more flights to Taipei, Taiwan in March.

Pending government approval, (HNA) will start operating Haikou to Taipei Taoyuan flights 1x-weekly from March 27.

News Item A-3: China's (HNA) Group has taken a stake of just >3% in Deutsche Bank and said it could buy further shares in the German lender. "We have the fullest confidence in Deutsche Bank's management and will keep a close watch on its future steps and lend support as a shareholder where appropriate," a spokesman for (HNA) said. (HNA), the Chinese aviation and shipping company intends to keep its holding below <10%, he said.

(HNA)'s stake of 3.04%, worth around EUR750 million/US$799 million at current share prices, makes it the bank's biggest shareholder after Qatar, which has close to 10% of stock via 2 sovereign wealth funds, and BlackRock, which owns 6.1%.

Deutsche Bank said it welcomed in principle any investor with a long-term view.

See video: "HNA-Boston to Beijing C Class 787-9:"

March 2017: News Item A-1: China’s Hainan Airlines (HNA) reported a net income of +CNY3.1 billion/+$45 million for 2016, up +4.5% over a net profit of +CNY3 billion in 2015.

(HNA) cited continuous domestic market demand growth and rapid international expansion as main reasons for the profit increase.
Operating revenue for the year jumped +15.5% to CNY40.7 billion, while operating expenses were up +21.8% to CNY31.4 billion.

Last year, (HNA) opened 42 international routes, comprising 20 long-haul intercontinental and 22 international routes. (HNA) operated 238 airplanes with an average fleet age of 4.6 years.

Passenger capacity grew +25.7% 94.4 billion (ASK)s against a +25.2% increase in passenger revenue to 83 billion (RPK)s. Passenger boardings rose +21.8% to 47 million with an average load factor of 87.8% LF, down -0.36 point.

Cargo traffic volume was up +5.9% to 407,366 tonnes.

Looking ahead, (HNA) predicts stable domestic market demand growth and rapid international market demand growth, but warned the pace would slow down. (HNA) also said challenges remain, including macro economy risks, exchange rate and fuel price fluctuations and market competition.

News Item A-2: Hainan Airlines (HNA) has launched its 9th non-stop route between China and the USA. On March 15 (HNA) introduced a 2x-weekly service between Chengdu (CTU) and Los Angeles (LAX) using its 787-9s. It already serves the Californian metropolis from Changsha, with Chongqing services starting on March 21. The new 11,573 km route faces no competition. The inaugural flight was operated by (HNA)’s Kung Fu Panda-themed airplanes. Between China and the USA, the world’s 2 biggest aviation markets, (HNA) is now responsible for 11% of seat capacity. Leading the way is United Airlines (UAL) with 22%, followed by Air China (BEJ) 18%, China Eastern Airlines (CEA) 16% and China Southern Airlines (GUN) with 11%. Chinese carriers account for 59% of capacity compared with 41% for USA carriers.

News Item A-3: The (HNA) Group, parent of Hainan Airlines (HNA) is expected to purchase an 82.5% stake in Frankfurt-Hahn Airport in western Germany as the company steps up its international expansion.

The airport’s federal state owners Rhineland Palatinate, which owns the 82.5% stake, said both sides are ready to sign the deal. The transaction amount has not been disclosed, but the deal is reportedly worth about €15 million/$15.8 million.

As Frankfurt’s 2nd biggest airport, Hahn is used mainly by freight and low-cost carriers (LCC)s, with Ireland’s Ryanair (RYR) and Hungary’s Wizz Air (WZZ) its 2 largest operators.

It is Rhineland-Palatinate’s 2nd attempt to sell the loss-making Hahn airport. In 2016, a deal with Chinese aviation and logistics group Shanghai Yiqian Trading Company collapsed after the bidder failed to make any payments after agreeing to a purchase price of $14 million.

Once the deal is complete, Hahn will become the 1st foreign airport in which the (HNA) Group holds controlling shares.

So far, the (HNA) Group controls 13 domestic airports (including Haikou Meilan International, Sanya Phoenix International, Yichang Sanxia, and Anqing Tianzhushan).

The (HNA)-Hahn airport deal is the latest in a series of overseas aviation acquisitions:

* In July 2016, the (HNA) Group increased its stake from 61.7% to 96.1% in Swiss airline catering and logistics services company Gategroup.

* The (HNA) Group plans to take a 23% shareholding in (TAP) Portugal, with a bond buy from Azul (AZL) Brazilian Airlines, in a $33 million transaction.

* (HNA) Group subsidiary, (HNA) Aviation bought an 80% stake in Zurich-based maintenance organization SR Technics (SWS) from its previous sole shareholder, Abu Dhabi’s state investment and development vehicle Mubadala.

* In May 2016, the (HNA) Group announced plans to invest A$159 million/$114 million to buy a 13% stake in Virgin Australia (VOZ).

News Item A-4: Chinese conglomerate the (HNA) Group has hiked its stake in Deutsche Bank, which is in the midst of an EUR8 billion/US$8.62 billion capital increase, to 4.76% from 3.04%, Germany's flagship lender said on March 23.

(HNA), which holds the stake via investment vehicle C-Quadrat, is the bank's 3rd-biggest shareholder after Qatar (QTA), which has close to 10% of stock, and BlackRock, which owns 6.1%.

Although (HNA) has said that its investment in Deutsche Bank is passive, the desire to boost its holding suggests (HNA) may have more strategic ambitions. The Chinese group has been on a acquisition spree that has seen it expand from its traditional business of aviation and logistics into financial services, betting on asset managers and consumer finance for growth at home and overseas.

The moves reflect a broader push by China into financial services globally as Beijing encourages its corporate sector to expand overseas, although it faces increased regulatory scrutiny in the USA and Europe.

News Item A-5: Hainan Airlines (HNA) is scheduled to make its Boeing 787 debut July 3 on domestic routes from Beijing to Haikou and Shanghai.

May 2017: News Item A-1: Hainan Airlines (HNA) earned a (1Q) net income of +CNY835.14 million, down -42.1% over net profit of +CNY1.4 billion in the year-ago quarter. Because of its merger with Tianjin Airlines (GCR), operating revenue rose +44.2% (YOY) to CNY14.5 billion against a +70.5% increase in operating expenses to CNY7 billion.

News Item A-2: On May 1, (HNA) introduced its Boeing 787 Dreamliners to non-stop services between Manchester and Beijing. (HNA) is using its flagship 787 airliner on the route, having already decided to increase frequencies between the 2 cities from 4x- to 5x-weekly from June 1.

(HNA)'s 787s are configured in a 2 class layout with 36C Business Class lie-flat seats and 177Y in Economy.

News Item A-3: "Hainan Airlines to add 13 787-9s and 6 737 MAX 8s"
by (ATW) Victoria Moores victoria.moores@penton.com, May 25, 2016.

(HNA) Group subsidiary Hainan Airlines (HNA) is raising funds to acquire 13 Boeing 787-9s and 6 737 MAX 8s.

The Civil Aviation Authority of China (CAAC) has confirmed (HNA)’s 5-year plan, paving the way for the additional 19 airplanes. Under the strategy, (HNA) will add 7 Boeing 787-9s in 2018, followed by another 6 787-9s and 6 737 MAX 8s between January and August 2019. It currently has 10 787-8s and 9 787-9s in its fleet.

(HNA) valued the order at about $4.19 billion and detailed plans to raise the money through a bonds issue. The airplanes will be used to strategically grow its fleet and network, in a bid to boost profitability and competitiveness. According to (HNA)'s website, its current fleet of 179 airplanes includes Boeing 737s, 767s, 787-8s, 787-9s and Airbus A330s.

787-9 (38773, B-6969), AerCap (DEA) leased.

July 2017: China Eastern Airlines (CEA) plans to allocate 150 to 200 aircraft to Beijing’s new airport in Daxing, which is expected to open in 2019. The airport has not yet been named.

(CEA) said the aircraft would be a mix of narrow bodies and wide bodies, which would operate on domestic Hong Kong, Macau and Taiwan routes and international routes to America, Europe, Australia, Japan, Korea and SE Asia. (CEA) currently has no direct intercontinental long-haul service from Beijing.

China Eastern (CEA) will invest CNY13.2 billion/$1.9 billion in its infrastructure at the new airport in an effort to enhance its position in the Beijing market. (CEA) previously said it plans to designate Beijing’s new airport as its core strategic hub for the most profitable Beijing to Shanghai route. This should increase the number of long-haul routes from Beijing and strengthen cooperations with other SkyTeam (STM) Alliance members.

(CEA) has also signed a framework cooperation agreement with the local Daxing government to cooperate in areas including (MRO), logistics, air catering and aviation media.

China Southern (GUN) has had a cooperation agreement with the Beijing government as early as 2011 to allocate 200 Airbus A330s and A380s to the new airport over the next 10 years.

China Eastern (CEA) and China Southern (GUN) are expected to build their own infrastructures at Beijing’s new airport based on their respective passenger boardings. This would account for 40% of the airport’s annual passenger volume (which is projected to be 45 million in 2020, 72 million in 2025 and 100 million in the longer term).

Air China (BEJ) and other Star (SAL) Alliance member carriers (including Hainan Airlines (HNA)) are expected to remain at Beijing Capital Airport, which has a slot shortage.

SEE VIDEO: "New Cabin Attendant Uniforms:

August 2017: News Item A-1: Hainan Airlines (HNA) reported a net profit of +CNY1.2 billion/+$17 million for the 2017 1st half, down -31% over net income of CNY1.7 billion for the same period last year.

According to a filing by the Shanghai Stock Exchange, (HNA)’s subsidiary Tianjin Airlines (GCR) saw a +42% profit decline to CNY84 million after operating expenses jumped +70.5% to CNY12 billion in the 1st quarter.

In February, (HNA) completed the acquisition of a 48.2% stake in Tianjin Airlines (GCR), making Hainan the controlling stakeholder in the Tianjin-based carrier with an 87.3% stake.

(HNA)’s (1H) operating revenue jumped +50.2% to CNY28.5 billion while operating expenses increased +75.3% to CNY24.6 billion.

Passenger boardings grew +53.3% to 34.2 million with an average load factor of 86.7% LF, down -1.5 points over the year-ago period. Capacity rose +53% to 67.1 billion (ASK)s against an increase of +50.4% in passenger revenue to 58.2 billion (RPK)s. Cargo traffic volume rose +11.6% to 224,082 tonnes.

In the 1st half, (HNA) accelerated its international expansion pace by opening 5 intercontinental routes, comprising Chongqing to Los Angeles, Chengdu to Los Angeles, Chongqing to Moscow, Tianjin to Moscow and Kunming to Moscow, as well as 9 international routes to neighboring Asian countries.

As of June 30, (HNA) introduced 3 Boeing 787-9s and expanded its fleet to 362 airplanes with an average fleet age of 4.6 years.

News Item A-2: China’s (HNA) Group (parent of Hainan Airlines (HNA)) has completed an 82.5% stake purchase in Frankfurt-Hahn Airport to facilitate its European expansion. The transaction is worth €15.1 million/$15.8 million.

In March, the (HNA) Group won the stake, which was owned by the airport’s federal state owners Rhineland Palatinate following European regulatory approval. The (HNA) Group said the company has received subsidies, including €25.3 million approved by the European Union (EU), for this deal.

As Frankfurt’s 2nd biggest airport, Hahn is used mainly by freight and low-cost carriers (LCC)s, with Ireland’s Ryanair (RYR) and Hungary’s Wizz Air (WZZ) its 2 largest operators.

According to "Reuters," the (HNA) Group also plans to join the bid for Belgrade Airport’s 25-year franchise rights.

THE (HNA) Group currently controls 13 domestic airports (including Haikou Meilan International, Sanya Phoenix International, Yichang Sanxia and Anqing Tianzhushan.

The (HNA) Hahn airport deal is the latest in a series of overseas aviation acquisitions:

• In July 2016, the (HNA) Group increased its stake from 61.7% to 96.1% in Swiss airline (CSR) catering and logistics services company Gategroup.

• The (HNA) Group plans to take a 23% shareholding in (TAP) Portugal, with a bond buy from Azul Brazilian Airlines (AZL) in a $33 million transaction.

• The (HNA) Group subsidiary (HNA) Aviation bought an 80% stake in Zurich-based maintenance organization SR Technics (SWS) from its previous sole shareholder, Abu Dhabi’s state investment and development vehicle Mubadala.

• In May 2016, the (HNA) Group announced plans to invest A$159 million/$114 million to buy a 13% stake in Virgin Australia (VOZ).

September 2017: News Item A-1: (HNA) began services between Shenzhen (SZX) and Brisbane (BNE) on September 20. (HNA) has introduced a 2x-weekly frequency between the Chinese and Australian cities. Flights depart on Wednesdays and Sundays and are operated by (HNA)’s A330-200s.

October 2017: News Item A-1: "Europe Eyes Potential of Flying Visits" by Fu Jing, China Daily, October 10, 2017.

Despite the threat of terrorist incidents, Chinese tourists continue to flock into European countries, and Chinese airlines have been responding to the demand by launching new direct flights to European destinations.

On September 30, Air China (BEJ), China's national carrier, introduced direct flights between Beijing and Athens, Greece. Hainan Airlines (HNA) will launch non-stop flights between Shanghai and Brussels on October 25 and China Eastern Airlines (CEA) will commence flights between Xi'an and Prague on October 29.

The flights between Shanghai and Brussels will be (HNA)'s 2nd route to the Belgian capital, as it also flies between Beijing and Brussels.

Prague is already linked by direct flights with Beijing, Shanghai and Chengdu, capital of Sichuan province, and by the middle of next year, the Czech capital, according to the schedule, will be connected by direct flights with 6 Chinese cities. That will make it stand out among Central and Eastern European countries, and many Western European countries as well.

The Czech Republic aims to become a regional aviation center, and it is keen to grasp the opportunities presented by expanding its aviation and tourism cooperation with China.

In terms of number of direct flights linking Chinese cities, Prague could even compete with London, Paris and Frankfurt, the established airport hubs in Western Europe.

On the demand side, the number of Chinese tourists traveling to Europe, according to official statistics, increased by 65% year-on-year during the 1st half of this year. It is an upward trend that is set to continue, because it is not just the residents of the large Chinese cities that are traveling overseas but even those of county-level towns.

Also the governments of both sides, especially the top leaders, have shown their determination to deepen such cooperation and boost tourism, economic and trade exchanges.

The Czech Republic is well prepared to tap the potential of the growing number of Chinese travelers. But other European countries will be able to do so as well since the number of Chinese tourists to Europe is huge and still growing.

According to official data, there are 600 flights between China and Europe every week. A number that will only increase over the coming decade, as China is set to become a medium-and high-income country in a few years in line with (UN) standards.

And it is not just Chinese tourists that Europe is hoping to attract. Poland, for example, has recently proposed a 10-year plan to build a hub airport between its capital Warsaw and the city of Lodz, and Chinese investors are being courted to participate in the project.

At the same time, the aviation industry itself will benefit from the predicted growth in the number of Chinese travelers. According to an official forecast, China will need to increase its fleet from the current 2,950 aircraft to >7,000 in 20 years. No other country will have such a demand for aircraft and the European aircraft manufacturer Airbus (EDS) will be 1 of those tasked with meeting the demand.

In seeking beneficial opportunities from the growing number of Chinese tourists traveling overseas, the Czech Republic is setting a good example for other European countries.

News Item A-2: Hainan Airlines (HNA) launched flights to its 9th North American destination on October 20, the day it inaugurated a 12,186 km link between Chongqing (CKG) and New York (JFK). (HNA) will also connect Chengdu to the New York airport, with flights on the latter route scheduled to begin on October 26.

“We’re excited to be offering the only non-stop flights between the USA East Coast and the major cities of Chengdu and Chongqing,” commented Hainan Airlines President Sun Jianfeng. “These new services represent the airline’s 13th and 14th non-stop transpacific routes, following our West Coast launch earlier in the year. The opening of the routes is expected to significantly enhance exchanges and collaborations concerning culture, the economy, and politics between the 2 countries and to further improve both Chengdu and Chongqing’s status as key global economic centres.” As stated by Jianfeng, these routes mean that Hainan Airlines (HNA) now offers 14 non-stop city pairs between China and North America.

The link from Chongqing to (JFK) will be operated by (HNA) 2x-weekly, with services initially being offered on Wednesdays and Fridays, flown by (HNA)’s 787-8s. From October 30, the Wednesday rotation will be moved to Mondays, with the airplane type switching to the larger 787-9.

With the welcome addition of Chongqing, and soon Chengdu, to (JFK)’s departure boards, it now means that (JFK) is connected to 6 destinations non-stop in China, with Beijing (Air China (BEJ)), Shanghai Pudong (China Eastern Airlines (CEA)), Guangzhou (China Southern Airlines (GUN)) and Fuzhou (Xiamen Airlines (XIA)) already being served. Interestingly, no USA carrier currently offers flights to China from (JFK), however United Airlines (UAL) links New York Newark to both Beijing and Pudong, with Air China (BEJ) also linking Newark to Beijing. In total there will be 49x-weekly flights between both New York airports and China this winter.

November 2017: Hainan Airlines (HNA) reported a net profit of +CNY1.6 billion/+$240.3 million in the 3rd quarter (down -5.9% over net income of +CNY1.7 billion in the year ago quarter) because of the poor financial performance of its subsidiary, Tianjin Airlines (GCR). Operating revenue jumped +41.5% to CNY16.7 billion while operating expense increased by 54.8% to CNY13 billion. (HNA) didn’t reveal the specific financial figures for (GCR).

December 2017: Hainan Airlines (HNA) began services between Shenzhen (SZX) and Cairns (CNS) on December 19. (HNA) will operate 2x-weekly (Tuesdays and Saturdays) to the airport in Northern Queensland which markets itself as ‘Connecting the world with the Great Barrier Reef.’

(HNA) will deploy A330-200s on the 5,596 km sector and faces no direct competition on the route, which is its 1st connection to Cairns. The link from Shenzhen is the 2nd Chinese service to be added to Cairns’ route network this month, with China Southern Airlines (GUN) commencing 3x-weekly flights from Guangzhou on December 4.

News Item A-2: The (HNA) Group (parent of Hainan Airlines (HNA) plans to adjust its overseas investments to better comply with China’s stricter national policies regarding overseas investments and implementation of “One Belt One Road” policy.

According to (HNA) Group (CEO) Tan Xiangdong, the company would answer to China’s national policies when making overseas investments. “We won’t make any overseas investments if [they] don’t comply with our national policy.

January 2018: News Item A-1: China’s big 3 carriers: China Southern (GUN), China Eastern (CEA) and Air China (BEJ) each reported passenger boardings of >100 million in 2017 as market demand continued to grow.

Last year, (GUN) transported 126 million passengers, up +10.2% over 2016. Domestic passengers were up +10.3% to 109 million and international passengers jumped +11.1% to 15.4 million. (GUN) carried 2.3 million passengers on regional routes (Hong Kong, Macau and Taiwan). Average passenger load factor was up +1.7 points to 82.2% LF.

China Eastern (CEA) transported 111 million passengers last year, up +9% over 2016. Domestic passengers were up +10% year-over-year (YOY) to 92.6 million. International passengers increased 2.4% to 14.7 million. (CEA) carried 3.5 million passengers on regional routes (Hong Kong, Macau and Taiwan). Average passenger load factor decreased 0.17 point to 81.1% LF.

Air China (BEJ) transported 101.6 million passengers last year, up +5.1% over 2016. Domestic passengers were up +6% to 83.5 million on domestic routes and 13.5 million on international routes, up +2%. Air China carried 4.6 million passengers on regional routes (Hong Kong, Macau and Taiwan). (BEJ)’s average passenger load factor increased 0.4 point to 81.1% LF.

Hainan Airlines (HNA) also experienced large growth last year. (HNA) transported a total of 71.7 million passengers in 2017, up +52.5% over 2016. (HNA) carried 67.4 million domestic passengers, up +51.7%; international passengers jumped +75.3% to 4 million. (HNA) carried 289,700 passengers on regional routes (Hong Kong, Macau and Taiwan). Average passenger load factor dropped -1.8 points to 86.1% LF.

Chinese carriers transported a total of 7.1 million tonnes of cargo in 2017, up +5.7% (YOY). The airlines carried 4.8 million tonnes on domestic routes, up +2% (YOY) and 2.2 million tonnes, up +15% (YOY), on international routes.

News Item A-2: China Eastern Airlines (CEA) and Hainan Airlines (HNA) on January 17 became the 1st Chinese carriers to let passengers use mobile phones in flight mode. This follows the relaxation of a longstanding rule prohibiting mobile phones to be turned on at all in aircraft by the Civil Aviation Administration of China (CAAC). Now they can, in flight mode, if the airline allows it. Hainan Airlines (HNA) has further taken advantage of the change to begin providing an in-flight wireless internet service.

News Item A-3: Hainan Airline Holding Company and (CFM) International have signed an (MOU) for the purchase of (LEAP-1A) engines to power 55 Airbus A320neo aircraft. A long-term support agreement for Hainan Airlines (HNA) and its affiliates was also reached. The total value of the (MOU) is $4.2 billion, (CFM) said on January 11.

The deal was signed by Hainan Airlines Holding Executive Chairman & (CEO) Bao Qifa and (CFM) parent company Safran (CEO) Philippe Petitcolin.

Hainan Airlines Holding is a subsidiary of the HNA Group. Between its mainline Hainan Airlines (HNA) and affiliates, the company operates a fleet of 560 aircraft (mostly Airbus A320s, A330s, Boeing 737s and 787s) on >1,400 domestic and international routes world wide.

As of November 30, 2017, Hainan Airlines (HNA) has 28 A319ceos and 28 A320ceos reported on Airbus's site as ordered and delivered, but not operational (56 A320ceo family aircraft total).

February 2018: News Item A-1: "The (HNA) Group May Sell More Subsidiary Shares After Tianjin Investment" by Bradley Perrett, (ATW) Plus, February 20, 2018.

The (HNA) Group, struggling to raise cash, is likely to sell shares in more of its subsidiary carriers after securing further local government investment in Tianjin Airlines (GCR), industry sources close to the group say.

In each case in which (HNA) is selling down ownership in an airline, the group is transferring a stake to a municipal or provincial government that already has investments in the carrier. Consequently, the group is likely to become more closely integrated into the Chinese state and be well placed to receive further support in the future, especially subsidies in return for opening routes that officials deem important to local economies.

Tianjin’s government, already part owner of (GCR), has paid CNY400 million/$63 million for an additional shareholding, the size of which is undisclosed. But the next carrier through which (HNA) raises funds with a sale of shares to a state entity, may be the only mainland Chinese airline in the group that does not have a government connection: Shanghai-based Suparna Airlines. The city of Nanjing, located close to Shanghai, is negotiating for a stake in the company, according to one of the industry sources.

One local government or another holds shares of all (HNA)’s other Chinese mainland airlines. In each case, there is a good chance of the associated government increasing its share and thereby providing the group with funds that could help cover an expected funding shortfall of $2.4 billion in the 2018 1st quarter.

The carriers in which (HNA) could sell down its holdings include Hainan Airlines (HNA), which is listed on the Shanghai stock exchange, unlisted Lucky Air (LKY) (based in Kunming), Capital Airlines (DER) (Beijing), West Air (CHO) (Chongqing), Chang An Airlines (CGN) (Xian), (GX) Airlines (GXB) (Nanning), Fuzhou Airlines (FZH), Guilin Airlines and Ningbo Airlines.

The Chinese culture of connections, or “guanxi,” is an important factor. In setting up the local carriers, (HNA) has developed a relationship with local officials. In some cases, it has even moved into non-aviation sectors that promote local economies, such as real estate development. The willingness of governments to help the embattled group would therefore be unsurprising.

(HNA) has previously received government support in times of need. The provincial government of Hainan, where the group originated, invested CNY1.5 billion in Hainan Airlines (HNA) in 2009, relieving some of the effects of the then global financial crisis.

Suparna (YTH), formerly the freight carrier Yangtze River Express (YTH), has been flying passenger services since December 2015, at 1st under the name Yangtze River Airlines (YTH). The government of Shanghai likely has little interest in buying a stake in it, because that city hardly needs to promote local growth in commercial air transportation. Besides, China Eastern Airlines (CEA) and its closely integrated subsidiary Shanghai Airlines (SHA) are based there.

Nanjing, on the other hand, is notable for the contrast between its economic importance (with a population around 8.5 million and Gross Domestic Product (GDP) per person of CNY48,000 a year) and its lack of a local airline. Almost anywhere else in the world, such a city would hardly feel constrained by not having a locally headquartered airline, but in China, a local airline is regarded as necessary by big cities and even by many smaller cities.

Still, (HNA) will want to preserve Suparna (YTH)’s position at Shanghai even if Nanjing invests in the carrier.

The reason for converting Yangtze River Express (YTH) to passenger operations was to strengthen the group’s position in Shanghai, China’s largest city. As a Shanghai-headquartered airline, it enjoys some preference in the allocation of air service rights.

News Item A-2: 737-800 (44398, B-1213) delivery and A330-343E (1614, B-5971), ex-(F-WWKD) Avolon leased.

March 2018: News Item A-1: Hainan Airlines (HNA) reported a net profit of +CNY3.3 billion/+$507 million in 2017, up +6% over net income of CNY3.1 billion in 2016. (HNA) cited robust market demand growth, especially in the international sector, for the increase. (HNA)'s operating revenue jumped +47.3% to CNY60 billion, while operating expenses increased +65.2% in CNY51.8 billion. Fuel costs grew +85.7% to CNY14.6 billion.

News Item A-2: "HNA Is Shedding Its Stake in Hilton Grand Vacations After +88% Gain" by Patrick Clark, "Bloomberg News" March 13, 2018.

The (HNA) Group is selling its 25% stake in Hilton Grand Vacations Inc as (HNA) continues to shed its holdings to repay debts.

(HNA) put its 24,750,000 shares on sale on March 13, according to a Hilton Grand Vacations statement, after Hilton agreed to remove a lockup provision that had barred (HNA) from selling before 2019. At the close of trading in New York, the stock had gained +88% from the price (HNA) paid about a year ago.

(HNA) started as a regional airline before embarking on a debt-fueled buying spree around the world. It has already cut its stake in Deutsche Bank AG and sold properties in London, Sydney, and Hong Kong. (HNA) sold its entire stake in Park Hotels and Resorts Inc last week and is still shopping 245 Park Ave, a New York City office tower it bought last year for $2.21 billion, and a 29% stake in (NH) Hotel Group (NA), among other assets.

(HNA) paid $6.5 billion in 2017 to acquire shares of Hilton Worldwide Holdings Inc and 2 spinoffs, Hilton Grand Vacations and Park Hotels. Last March, (HNA) paid $24.32 per share to buy its stake in Hilton Grand Vacations. The agreement announced March 13 gives Hilton Grand Vacations the right to repurchase up to 4,340,000 shares in a 2ndary offering at the same price paid by underwriters of (HNA)'s offering.

News Item A-3: China’s (HNA) Group canceled an initial public offering (IPO) for Switzerland’s Gategroup at the last minute because of a gap in valuation under current market conditions, dealing a blow to the debt-ridden Chinese company.

Gategroup said the (IPO), valued about CHF350 million/$370 million, was scheduled to begin trading on the "SIX" Swiss Exchange March 27.

(HNA) had planned to raise as much as CHF1.29 billion/$1.4 billion by selling a 65% stake in the Swiss aviation catering company. In 2016, (HNA) Group subsidiary (HNA) Aviation Air Catering has increased its stake in Swiss airline catering and logistics services company Gategroup from 61.7% to 96.1%.

Last year, Gategroup’s operating revenue rose +35% to CHF4.6 billion and its operating profit before tax jumped +50% to CHF300 million.
“We will continue to implement our Gateway 2020 strategy, which has positioned Gategroup as the market leader and allowed us to double results over the past 2 years. We remain committed to continue generating value for our customers and shareholders,” Gategroup (CEO) Xavier Rossinyol noted in a written statement.

(HNA) is estimated to have a debt of about CNY600 billion. (HNA) Group Chairman Chen Feng previously admitted the company faced liquidity issues when the group sold 3 housing properties in Hong Kong in February; in early March the (HNA) Group sold overseas investments. The company was reportedly selling 9 housing properties in Beijing and Shanghai, worth $2.2 billion.

(HNA) has also been selling shares in Deutsche Bank, Park Hotels & Resorts, and Hilton Grand Vacations Inc as part of its campaign to raise cash.

Hainan Airlines Holding has suspended trading since January 10 to conduct a major asset restructuring to take controlling shares in West Air and Guilin Airlines, in addition to (MRO) providers (HNA) Technic and SR Technics. Also listed were flight school Hainan Sky Plumage and hotel investment and management platform (HNA) Hotels Holding.

News Item A-4: Hainan Airlines (HNA) has applied to the Civil Aviation Administration of China (CAAC) to open +4 more intercontinental routes this year, despite cutting international capacity to the USA and Europe in September 2017.

According to the (CAAC), (HNA) plans to open the following routes in 2018: 3x-weekly Changsha to London Boeing 787 service in March; 2x-weekly Beijing to Edinburgh to Dublin Airbus A330/Boeing 787 service in June; 2x-weekly Beijing to Dublin to Edinburgh A330/787 service in September.

News Item A-5: "Hainan Airlines Makes Missed Fuel Payments, Continues International Expansion" by Katie Cantle March 20, 2018.

Hainan Airlines (HNA) has made up missed fuel payments before the March 15 deadline and has continued international expansion plans by opening 3 routes from Shenzhen this week.

Earlier this month, South China Bluesky Aviation Oil, a subsidiary of China National Aviation Fuel Group, threatened to stop supplying fuel to (HNA) on March 16 if the company failed to make up delinquent payments since October 2017.

(HNA) is in discussions with South China Bluesky Aviation Oil about paying for liquidated damages after bringing payments up to date and establishing a long-term plan for paying off future fuel bills.

(HNA) Group Chairman Chen Feng previously admitted the company faced liquidity issues when the group sold 3 housing properties in Hong Kong in February; in early March the (HNA) Group sold overseas investments. This week, the company is reportedly selling 9 housing properties in Beijing and Shanghai, which are worth $2.2 billion.

Currently, South China Bluesky Aviation Oil is supplying aviation fuel to (HNA) as normal. (HNA) has confirmed (HNA) is operating normally and paying bills as scheduled.

Fuel expenses have become the biggest operating cost for Chinese carriers. Hainan Airlines Holding’s fuel costs reached CNY7.9 billion/$1.2 billion in 2016, accounting for 25% of (HNA)’s total operating expenses.

Separately, (HNA) launched weekly Shenzhen to Sihanoukville service March 19; 2x-weekly Shenzhen to Brussels service March 20; and will open 2x-weekly Shenzhen to Madrid on March 22.

Hainan Airlines (HNA) can receive >CNY100 million in subsidies from Shenzhen’s local government every year for 1 intercontinental route originating in Shenzhen.

According to the cooperation agreement between (HNA), Shenzhen Bao’an International Airport and the Transport Commission of Shenzhen Municipality last August, (HNA) is committed to open 1 intercontinental route and 2 intra-Asia routes from Shenzhen annually by 2020.

The company also plans to increase its overnight aircraft at Shenzhen Airport to 30 (including 15 wide bodies) by 2020.

April 2018: News Item A-1: "Virgin Australia to Launch New Flights to Hong Kong" by Adrian Schofield, (ATW) Daily News, April 03, 2018.

Virgin Australia (VOZ) will begin flights from Sydney to Hong Kong on July 2, which will join its existing service from Melbourne to Hong Kong. (VOZ) had previously signaled it wanted to start the Sydney flights this year as it expands its reach in the Greater China market.

(VOZ) regards Hong Kong as its gateway to mainland China, thanks to existing connections with partner Hong Kong Airlines (CRY). (VOZ) has also revealed it will be adding an interline agreement with HK Express (HKE), which like (CRY) is an affiliate of the (HNA) Group. (HNA) is a major shareholder in Virgin Australia (VOZ).

The HK Express (HKE) interline flights will be sold by (VOZ) starting later this month, and will allow passengers from Sydney and Melbourne to connect to other Asian destinations beyond Hong Kong. (VOZ) also connects with Virgin Atlantic (VAA) flights in Hong Kong.

The new Sydney to Hong Kong route will use Airbus A330-200s. "Greater China is a key pillar of our strategy and the addition of Sydney services to our already popular Melbourne flights to Hong Kong strengthens our proposition immensely," (VOZ) group executive Rob Sharp said.

News Item A-2: China’s Hainan Airlines (HNA) will open a route from Shenzhen to Vienna, Austria this fall as a part of a commitment to open more international routes from Shenzhen, (HNA) said on the sidelines of the Boao Forum for Asia. This new 2x-weekly service is expected to use Boeing 787s. (HNA) operates 15 international services originating from Shenzhen, plus this new one starting in October. (HNA) Chairman Bao Qifa said the new service will help Shenzhen.

News Item A-3: "Hainan Airlines Continues to Expand Iinternational Services" by (ATW) Katie Cantle, April 23, 2018.

Hainan Airlines (HNA) plans to open at least 40 international services from Hainan by the end of 2022 as China implements a new national policy for building Hainan as a free trade port.

Earlier in April, Beijing announced a new policy granting a 30-day visa-free visit to Hainan for citizens from 59 countries, effective May 1. Hainan Province Governor Shen Xiaoming has also vowed to expand the number of international services from Hainan to at least 100 in the next 2 or 3 years.

Over the past 2 years, (HNA), the Haikou-based carrier has launched 10 international and regional (Hong Kong, Macau and Taiwan) services from Hainan. “In 2017, (HNA) carried nearly 20 million passengers in Hainan on 125,000 domestic and international flights, of which passenger boardings reached >600,000 on international and regional routes,” (HNA)’s Chairman Bao Qifa has previously stated.

(HNA) currently operates 53 services from Hainan to 40 international destinations, which (HNA) plans to increase in 3 phases over the next 5 years.

Plans include:

1. Increasing the number of international services originating in Hainan to 58;

2. Growing the number of international services from Hainan to 100; and

3. Attracting 2 million inbound passengers to Hainan.

Hainan Airlines (HNA) parent, the (HNA)( Group is also committed to building Haikou Meilan International Airport as a gateway to Japan, Korea and SE Asia, a major inbound passenger traffic channel connecting with Europe, America and Australia and a south sea hub on the Maritime Silk Road.

The (HNA) Group is also taking an active part in the construction of Sanya Phoenix International Airport, which aims to handle 38 million passengers by 2025 and 70 million by 2045.

Currently, international traffic supplied by (HNA) only accounts for 4% of Sanya’s passenger throughput. This year, (HNA) plans to launch 10 new services from Sanya to SE Asian destinations.

The (HNA) Group owns 3 airports: Haikou Meilan Airport, Sanya Phoenix and Qionghai Bo’ao Airport in Hainan.

News Item A-4: 1 737-800 (CFM56-7B) (44400, B-1103), ex-(N1786B), BoCom Leasing leased and 1 737 MAX 8 (62196, B-1387), deliveries.

May 2018: News Item A-1: The (HNA) Group has sold its 6.2% stake in South African carrier Comair (CML) through its Netherland-based subsidiary as part of the Hainan, China-based company’s asset disposal plan, according to a (CML) filing released through the Johannesburg Stock Exchange.

Details about the time and price of the transaction were not released. In 2015, the (HNA) Group purchased its 6.2% stake in (CML) with an investment of $12.7 million, now worth $14 million at current market rates. The (HNA) Group has experienced financial difficulty in recent months; it is estimated the company is $94 billion in debt. To date, (HNA) has disposed of approximately $13 billion worth of assets.

(HNA) Group Chairman Chen Feng previously admitted the company faced liquidity issues when it sold 3 Hong Kong housing properties in February; in March, the (HNA) Group sold several overseas investments. The company is reportedly selling 9 housing properties in Beijing and Shanghai, worth $2.2 billion. (HNA) has also been selling shares in Deutsche Bank, Park Hotels & Resorts and Hilton Grand Vacations Inc as part of the Group’s campaign to raise cash.

Launched in July of 1946, Comair (CML) is a member of the Oneworld (ONW) Alliance and signed franchise rights agreement with British Airways (BAB) in 1996. In 1998, (CML) launched an Initial Public Offering (IPO) on the Johannesburg Stock Exchange and became a franchise carrier for (BAB) again in 2009 with a validation period of 11 years. Coincidently, the franchise rights agreement sealed between (COI) and (BAB) expires this year. (CML) is also the parent of low cost carrier (LCC) Kulula.com (KUL).

News Item A-2: "China's Hainan Airlines Launches Tianjin to Vancouver Direct Flight" by China Daily, May 25, 2018.

A direct flight between Tianjin and Vancouver was launched on May 25.

Flight HU7959 operated by Hainan Airlines (HNA) is the 1st direct passenger air route linking Tianjin with North America.

The flight, operated using a 787 wide body airplane will take about 11 hours and fly every Monday and Friday according to Zhang Hu with the Tianjin Binhai International Airport.

This year is the China to Canada Tourism Year, and the new air route will improve bilateral economic and cultural exchanges, according to Dave Murphy, Minister (Commercial) at the Embassy of Canada to China.

This is the 16th international air route opened by (HNA) in N America, according to Xu Jun President of (HNA). Xu said more routes, including flights linking Beijing with Dublin, Shenzhen with Vienna, and Guangzhou with Tel Aviv will also be launched in the coming months.

June 2018: "Inaugural China-Scotland Air Service Touches Down in Edinburgh" by Han Baoyi, Du Xiaoying, Kevin Wang, "China Daily" June 13, 2018.

A new air route connecting China, Scotland and Ireland was launched on Tuesday. The inaugural flight on the Hainan Airlines (HNA) direct service between Beijing and Edinburgh took place on June 11. It is the 1st air service between mainland China and Scotland.

After landing at Edinburgh Airport, the Airbus A330-300 was given a water salute to celebrate the success of the flight, while passengers were greeted by a traditional Scottish bagpipe player.

Gordon Dewar (CEO) Edinburgh Airport, said: "This is a momentous day as we connect not only Edinburgh and Beijing for the 1st time, but Scotland and China too. It is a route which has immense opportunities for our countries from tourism and business to culture, education and more." The return flight will have a stopover at Dublin before coming back to Beijing on the same day.

Flights from Beijing on Thursdays will 1st land in Dublin, then Edinburgh which also establishes the 1st direct flight between mainland China and Ireland. "Starting from today (June 12th), (HNA)'s new route from Beijing to Edinburgh and Dublin will have 4x-weekly" said Bao Qifa, Chairman of (HNA).

"The launch of the new service is in line with "The Belt and Road Initiative," which aims to enhance the China to UK cooperation in economy, culture and tourism."

The 1st flight from Beijing to Edinburgh had >200 passengers on board, most of them tourists, and it is hoped the popularity of the route will grow.

"4x-weekly won't be enough" said Pan Xinchun, China's consul general in Edinburgh. "We hope we can have flights every day in the near future."

Over the last 25 years, (HNA) has clocked 6.3 million hours of safe flying time, while connecting 220 cities via >1800 routes around the globe. The new service from Beijing to Edinburgh and Dublin is their 4th route serving the UK and Ireland.

737-84P (32604, B-2677), ferried Nanking to Tallin.

July 2018: News Item A-1: "Chairman of China’s (HNA) Group Dies in Accident in France" Associated Press (AP), Originally published July 4, 2018 at 1:11 am, Updated July 5, 2018 at 12:12 am.

The co-Chairman of the (HNA) Group, a conglomerate that operates China’s 4th-largest airline Hainan Airlines (HNA) and racked up tens of billions of dollars in debt as it went on a global buying spree, died in an accident while on a business trip in France.

Wang Jian, a co-Founder of the company, suffered “severe injuries” in a fall in Provence in southern France and died Tuesday at age 57.

“Together, we mourn the loss of an exceptionally gifted leader and role model, whose vision and values will continue to be a beacon for all who had the good fortune to know him, as well as for the many others whose lives he touched through his work and philanthropy,” the company said. Regional French media outlet "France Bleu" said Wang fell a dozen or so meters (yards) while taking photos on a high wall in Bonnieux, a town in a region famed for its panoramic views.

Launched in 1993 on the southern island of Hainan, (HNA) expanded into finance, hotels, logistics and other businesses in a multibillion-dollar global acquisition spree. Its holdings include stakes in Deutsche Bank and China’s 4th-largest airline, Hainan Airlines (HNA).

(HNA) has been selling some assets as Chinese regulators tighten lending controls and press companies to rein in debt. In April, (HNA) disclosed plans to sell at least some of its >$6.5 billion stake in hotel operator Hilton Worldwide Holdings Inc, according to a USA regulatory filing. It already has sold >$1 billion stake in an affiliated timeshare company, Hilton Grand Vacations Inc. It agreed to sell its large stake in Spanish hotel operator (NH) Hotels to Thailand-based Minor International last month.

Wang graduated from the Civil Aviation University of China and received an (MBA) from the Maastricht School of Management in the Netherlands.

News Item A-2: A330-343E (1855, B-1048), ex-(F-WWCX) sold to Avolon and leased back.

August 2018: Japan’s (ORIX) is to Acquire a 30% Stake in Irish Lessor Avolon" by Victoria Moores (victoria.moores@informa.com), August 8, 2018.

Japanese financier (ORIX) is set to acquire 30% of Irish lessor Avolon (AZV) from China’s Bohai Capital for $2.2 billion, with completion expected in the 4th quarter of 2018.

Announcing the deal on August 8, (AZV) said the buy-in from (ORIX)’s Ireland-based (ORIX) Aviation Systems subsidiary will provide “a significant credit enhancement,” valuing its overall business at $23.7 billion.

Bohai will remain an (AZV) shareholder, albeit with a smaller stake, and the agreement remains subject to approval from Bohai’s largest shareholder, the (HNA) Group. After a wave of rapid global acquisitions, (HNA) hit liquidity problems and has been selling off assets from its portfolio. (AZV) said it has already secured (HNA)’s “commitment” to the transaction.

(ORIX) was established in 1964 and has a wide portfolio of business interests, spanning energy, private equity, infrastructure, automotive, shipping, aircraft, real estate and retail financial services. (ORIX) entered the aircraft-leasing business in 1978 and set up Dublin-headquartered (ORIX) Aviation in 1991. For the 12 months to March 31, (ORIX) as a whole reported revenue of $25.6 billion and $2.8 billion net income.

“(ORIX) is a strong, investment-grade institution with a proven track record in the leasing sector over multiple industry cycles,” (AZV) (CEO) Dómhnal Slattery said. “We will benefit from (ORIX)’s experience and relationships.”

Specifically, the deal will boost (AZV) profile in the Japanese financial markets and pave the way for cooperation with (ORIX) Aviation’s leasing, asset management and trading activities.

As of June 30, Avolon (AZV) had a portfolio of 890 owned, managed and committed aircraft, while (ORIX) Aviation owns and manages >200 aircraft, leased to >70 airlines in >30 countries.

“By virtue of the acquisition of the shares of (AZV), (ORIX) aims to achieve sustainable long-term growth of its business by way of strengthening its access to the manufacturer order positions that (AZV) holds and also further expanding its aircraft-leasing business investment,” (ORIX) said.

On completion, (ORIX) will have 2 seats on the (AZV) board, alongside 3 Bohai directors, Slattery and 1 independent director. “Our new shareholder structure and the associated enhancements to our governance framework will also accelerate our momentum towards an investment grade rating (a key objective for our business).”

Currently, approximately 40% of commercial aircraft worldwide are sourced on operating lease, but this is forecasted to increase to almost 50% in the future.

October 2018: "(HNA) Group Selects (IAI) for Engine (MRO)" by Arie Egozi, October 02, 2018.

Israeli Aerospace Industries (IAI)’s Bedek Aviation Group will maintain and overhaul (V2500) engines for the Chinese (HNA) Group. According to the 5-year agreement, the (HNA) Group will send the (V2500) engines powering its Airbus A319/A320/A321 aircraft to (IAI) for service.

The signing of the September 4 agreement at the (HNA) Group's headquarters in Haikou is estimated at tens of millions of dollars a year. Late last year, (IAI) added the (V2500) engine to its engine services capabilities and earlier this year, International Aero Engines (IAE) and (IAI) signed a 10-year general terms agreement for maintenance of (V2500) engines at (IAI).

November 2018: "Hainan Airlines 9-month Net Profit Down >70%" by
Chen Chuanren (chuanren@purplelightvisuals.com), November 2, 2018.

Hainan Airlines (HNA) Holding reported a net profit of +CNY729 million/+$106 million for the 1st 9 months, a -73.6% decline compared to the year-ago period. Revenue for (HNA), China’s largest private airline group was up +15.9% to CNY52.3 billion year-over-year (YOY), while operating profit was down -73.6% to CNY916 million. Operating costs of CNY53.5 billion and a weakened Chinese yuan against the USA dollar contributed to the decline.

Flagship carrier (HNA) saw operating revenue grow +11.7% to CNY29.8 billion, as costs also increased +21% to CNY25 billion. Operating profit was down -72% to CNY721 million, as was net profit, to CNY616 million.

(HNA)’s capacity grew +17.7% and (RPK)s were up +15.9%. Domestic passengers accounted for about 93% of the total 59.8 million passengers for the period.

The group carried +16.5% more international passengers (YOY), with (RPK) increasing by +23.7% and (ASK) by +25.9%, with a load factor of 75% LF. The group’s fleet grew to 436 airplanes, as (HNA) took in 4 Boeing 787-9s, 3 737-800s, an Airbus A350-900 and an A320.

The (HNA) Group is reportedly seeking to divest its aviation businesses by selling Lucky Air (LKY). Talks are underway to sell a 60% stake in the (LCC) to China Eastern Airlines (CEA), and 40% to Yunnan (SASAC), the province’s state-owned asset regulator. (HNA) has already sold numerous overseas assets to ease mounting debts, but the move to sell (LKY) would be the 1st from its aviation portfolio.


Click below for photos:
HNA-737 MAX 8-2014-07
HNA-737-800 - 2012-01
HNA-737-86J - 2013-10
HNA-787 - 2013-07
HNA-787 - 2014-09
HNA-787 B-1540 2018-10.jpg
HNA-787 B-7302 - Kung Fu Panda-2016.jpg
HNA-787 B-7902 2018-10.jpg
HNA-787-2014-06-AT BOSTON USA
HNA-787-9 - 1st 2016-06.jpg
HNA-787-9 - 2017-05.jpg
HNA-787-9 B-1540 2018-03.jpg
HNA-787-9 B-6998 2018-04.jpg
HNA-A330-200 - 2012-07
HNA-A330-200 - 2015-08.jpg
HNA-A330-300 B-1022 2018-03.jpg

November 2018:

0 737-3Q8 (CFM56-3C1) (2557-26295, /93 B-2937 "BAMBOO;" 2581-26296, /94 B-2938 "CHRYSANTHEMUM;" 2772-26325, /96 B-2963), (ILF) LEASED, RETURNED. 148Y.

6 737-322F (CFM56-3) (1692-24360; 1694-24361; 1696-24362, B-5059; 1704-24378, B-5053; 1724-24379; 1750-24454), EX-(UAL), WET-LEASED TO (YTH) 2004-05. FREIGHTER.

0 737-33A (CFM56-3C1) (2333-25603, /92 B-2578 "PLUM BLOSSOM;" 2342-25505, /92 B-2579 "ORCHID"), (AWW) LEASED. RETURNED. 148Y.

4 737-330QC (CFM56-3B2) (1465-23835, /87 B-5058, 2004-01; 1508-23836, /88 B-5056, 2003-06; 1514-23837, /88 B-5057, 2003-07) (1677-24283, /89 B-5055, 2002-10), EX-(DLH), WET-LEASED TO (YTH) 2002-12. 23835 WET-LEASED TO (YTH) 2004-01. FREIGHTER.

0 737-36N (CFM56-3) (28602, B-2113), 2006-08. RETURNED FROM CHINA WEST AIR 2012-01.

0 737-36N (CFM56-3) (3124-28606, B-2112), LIFT IRELAND LEASED 2007-02, WET-LEASED TO (DER) 2006-12.

0 737-36Q (CFM56-3C1) (2914-28662, /97 B-2608, 3020-29326, /98 B-3000), (BOU) LEASED 2004-09, FOR (DER) OPERATIONS. 148Y.

0 737-4Q8 (CFM56-3C1) (1866-24332, /90 B-2960; 2782-26334, /96 B-2965; 2793-26335, /96 B-2967; 2811-26337, /96 B-2970), (ILF) LEASED, (MAS) MAINTENANCE. 24322; RETURNED, LEASED TO (RLX) 2013-07. 8F, 138Y.

0 737-44P (CFM56-3C1) (3067-29914, /98 B-2501; 3106-29915, /98 B-2576 "PINK & RED LILIES"), (GEF) LEASED. 8F, 138Y.

1 737-48E (CFM56-3) (2543-25766, /94 B-2990), EX-(AAR), (SNR) LEASED. 8F, 138Y.

0 737-700 (CFM56-7B24), EX-(VAR) & (BRT), (GEF)/(BOU) LEASED 2003-01. RETURNED.

1 737-74P (CFM56-7B) (39200, B-5806), LEASED TO LUCKY AIR (LKY) 2013-06.

8 737-74P (CFM56-7B) (38201, B-5388, 2013-07; 39212, B-5825, 2014-07), 39212 LEASED TO LUCKY AIR (LKY) 2014-06.

0 737-75C (CFM56-7B24) (29086, 10/98 B-2576), RETURNED TO (XIA).

1 737-76N (CFM56-7B24) (154-28582, /98 B-5060; 163-28583, /98 B-5061; 173-28585, /99 B-5062), (GEF) LSD 2003-03. 28582; 28583; 28585; WET-LEASED TO (CHG). 148Y.

2 737-705 (CFM56-7B) (230-29091, B-5091 2004-11; 260-29092, B-), (BBB) LEASED. 148Y.

0 737-790 (CFM56-7B) (1382-30662; 1386-30663), (ILF) LEASED 2011-01 FOR LUCKY AIR (LKY) OPERATIONS.

57 737-800 (CFM56-7B).

1 737-8BK (CFM56-7B) (29673, B-5346), (TCI) LEASED 2007-09.

2 737-8FH (CFM56-7B) (29640; B-5115, 2005-02; 2073-35090, B-5181, 2006-10), WET-LEASED TO (CGN). 156Y.

3 737-8FH (CFM56-7B) (1745-29672, B-5116, 2005-07; 2042-35089, B-5180, 2006-09; 2459-35101, B-5359, 2007-12), (RBS) AEROSPACE LEASED. 156Y.

2 737-8Q8 (CFM56-7B26) (212-28220, /99 B-2638 "MELODY OF COCONUT OF THE SEA;" 273-28056, /99 B-2646), (ILF) 7 YEAR LEASED. 8F, 156Y.

1 737-800 (CFM56-7B26) (44398, B-1213), 2018-03.

12 737-800 (CFM56-7B), 12 YEAR LEASED, 1 (AZV) LEASED 2015-06, 1 LEASED 2015-07.

1 737-800 (CFM56-7B), EX-(62575, B-1130), BOCOM LEASING LEASED 2018-07.

3 737-800 (CFM56-7B), (SIL) LEASED.

5 737-800 (CFM56-7B), (GEF) LEASED:

1 737-808 (CFM56-7B26) (2097-34708, B-5182, 2009-11), (ICE) LEASED. 8F, 156Y.

1 737-808 (CFM56-7B) (2380-35076, B-KBM), (TBC)/(HNA) LEASED TO (CRY) 2007-09.

1 737-808 (CFM56-7B) (2419-35077, B-5358), (BOC) AVIATION (SIL) LEASED 2007-10.

1 737-84P (CFM56-7B26) (345-29947, /99 B-2647 "CONVIVAL SURF" ("HAPPY SEA"). 8F, 156Y.

2 737-84P (CFM56-7B26) (607-30474, /00 B-2651; 731-30475, /00 B-2652 "FRAGRANT GOLDEN EAR"). 8F, 156Y.

3 737-84P (CFM56-7B26) (972-32599, /01 B-2159; 1015-32600, /01 B-2157; 1033-32601, /01 B-2158), 2001-12. WITH WINGLETS. 8F, 156Y.

54 737-84P (CFM56-7B26) (1170-32602, /02 B-2676; 1191-32604, /02 B-2677; 1766-32603, B-5135, 2005-08; 1796-32605, B-5136, 2005-10; 1800-34030, B-5141, 2005-11; 1805-32606, B-5137, 2005-11; 1832-32607, B-5138, 2005-12; 1855-32608, B-5139, 2006-01; 1921-34029, B-5153, 2006-04; 2330-35749, B-5338, 2007-08; 2433-35747, B-5337, 2007-11; 2556-35752, B-5371, 2008-03; 2593-35758, B-5372, 2008-04; 2618-35754, B-5373, 2008-05; 35763, B-5539, 2010-08; 2769-36541, B-5418, 2009-01; 2772-35285, B-5427, 2009-01; 2778-35764, B-5408, 2009-01; 2801-34031, B-5416, 2009-03; 2827-24032, B-5430, 2009-03; 2854-34033, B-5465, 2009-03; 2885-36779, B-5467, 2009-05; 2912-34034, B-5466, 2009-05; 2938-35748, B-5482, 2009-06; 3038-35751, B-5478, 2009-09; 3066-35753, B-5479, 2009-10; 35761, B-5540, 2010-09; 35766, B-5521, 2010-06; 36206, B-5855, 2013-12; 3095-36780, B-5462, 2009-11; 3186-36782, B-5503, 2010-02; 3192-35757, B-5502, 2010-02; 3278-36781, B-5522, 2010-05; 36782, B-5503, 2010-02; 36783, B-5538, 2010-08; 37425, B-5552, 2010-09; 38146, B-5625, 2011-10; 38149, B-5636, 2012-01; 38155, B-5685, 2012-07; 39214, B-1996, 2014-08; 39219, B-1783, 2015-01; 39223, B-5579, 2011-04; 41378, B-1785, 2015-01; 41383, B-6061, 2015-09; 41484, B-6063, 2015-09; 41485, B-6065, 2015-09; 41487 B-6066, 2015-09), WITH WINGLETS. 32603 WET-LEASED TO (CHG) 2005-08. 35747; & 35749; FOR GRAND CHINA AIR (GCH) OPERATIONS, 2007-08. 35285; WET-LEASED TO (CRY) 2008-12. 8F, 156Y.

1 737-84P (CFM56-7B26) (43658, B-6062), AVOLON LEASED 2015-07. 8F, 156Y.

1 737-84P (CFM56-7B26) (41390, B-7618), (GEF) LEASED 2016-08. 8F, 156Y.

1 737-84P (CFM56-7B26) (39963, B-6060), (SMBC) AVIATION CAPITAL LEASED 2015-07. 8F, 156Y.

2 737-84P (CFM56-7B26) (41568, B-1795; 41569, B-1796), (TCI) LEASED 2015-03. 8F, 156Y.

2 737-86J (CFM56-7B27) (36122, B-1793, 2015-03; 37768, B-1906 - - SEE PHOTO - - "HNA-737-86J - 2013-10"), EX-(BER), EX-(D-ABMG), (GEF) LEASED 2013-10. 8F, 156Y.

2 737-86N (CFM56-7B26) (67-28574, /98 B-2636; 103-28576, /99 B-2637 "BEAUTY OF THE NATION"), (GEF) LEASED, 1ST IN CHINA, +7 ORDERS (WITH WINGLETS). 8F, 156Y.

8 737-86N (CFM56-7B26) ( 2769-36541, B-5418, 2009-01; 2806-36542, B-5428, 2009-03; 2821-35639, B-5417, 2009-03; 2831-36543, B-5429, 2009-03; 2973-35648, B-5480, 2009-07; 2981-35649, B-5481, 2009-07; 60688, B-7171, 2016-01; 60691, B-7639, 2016-08), (GEF) LEASED. 8F, 156Y.

0 737-86Q (CFM56-7B) (1147-32885, /02 B-2675), (BOU) LEASED 2002-06. RETURNED. 8F, 156Y.

4 737-883 (CFM56-7B26) (548-28319, B-5083, 2004-02; 551-28320, B-5089 2004-02; 577-28321, LN-RCR; 587-30193, /00 B-), BOUGHT FROM (SAS). 8F, 156Y.

5 +52 ORDERS 737 MAX 8 (CFM56-7B) (62179, B-1100, 2018-07; 6616-62183, B-1390, 2007-12; 62196, B-1387, 2018-04). 8C, 168Y.

0 757-21B (392-25259, /91, B-2818; 583-25889, /93, B-2824; 585-25890, /93, B-2825), (GUN) LEASED & MAINTENANCE. RETURNED.

8 767-34PER (PW4056) (889-33047, /02 B-2490; 891-33048, /02 B-2491; 893-33049, /02 B-2492, 2003-01), WET-LEASED TO (XIH) 2002-10.

0 767-3BGER (PW4060) (786-30563, B-2561; 817-30566, B-2562), EX-(SBL), DEUTSCHE STRUCTURED FINANCE LEASED 2004-06. RETURNED, LEASED TO (ETH) 2007-07. 272Y.

10 787-8 DREAMLINER (GEnx-1B) (73-34938, /13 B-2728; 76-34939, /13 B-2722; 34940, /14 B-2738, 2014-06; 34941, /13 B-2729; 34945, /13 B-2731; 38054, B-2759, 2015-03; 34940, B-2738 (RETURNED FROM SUPARNA AIRLINES)), 2 (ALE) LEASED. J36, 177Y.

17 +26 ORDERS 787-9 DREAMLINER (GEnx-1B) (B-1499; 62715, B-1540 "KUNG FU PANDA," 62718, B-6998, (Charleston #159); 62714, B-7839, 2016-08; B-7880, 2016-06).

1 787-9 DREAMLINER (GEnx-1B) (38773, B-6969), AERCAP (DEA) LEASED 2017-05.

0 A319-112 (2985, B-6169), (GEF) LSD 2007-01. RETURNED. 134Y.

1 A319-112 (3285, B-6177, 2007-10).

17 +3 OPTIONS A319-115 (CFM56) (2557, B-6210, 2005-09; 2561, B-6211, 2005-09; 2581, B-6212, 2005-11; 2611, B-6215, 2005-12; 2617, B-6198, 2005-11; 2644, B-6199, 2005-12; 2733, B-6222, 2006-04; 2746, B-6221, 2006-04; 2849, B-6156, 2006-08; 2891, B-6157, 2006-08), 2557; 2561; 2611; WET-LEASED TO (CGN). 134Y.

1 A319 (CFM56), WET-LEASED TO (CGN) 2005-09. 134Y.

0 A319-132 (V2524-A5) (3342, B-6243), RETURNED TO (ILF), LEASED TO (DER) 2007-12. 136Y.

3 A319-132 (V2524-A5) (3768, B-6192, 2009-01; 3851, B-6245, 2009-04), (ILF) LEASED FOR (DER) OPERATIONS. 136Y.

1 A319-132 (V2524-A5) (3849, B-6193), FOR GRAND CHINA AIR (GCH) OPERATIONS 2009-02. 136Y.

4 A319-132 (V2524-A5) (3842, B-6401, 2009-10; 3914, B-6402, 2009-12; 3958; 3982), FOR (DER) OPERATIONS. 136Y.

1 A319-133 (3638, B-6400), 2009-03.

11 A320ceo (V2500) (4423; 4490):

2 A320ceo FOR (LKY).

2 A320ceo FOR (CHO).

40 +15 ORDERS A320neo (LEAP-1A).

1 A320-214 (5216, B-6958), EX-(B-511L), LEASED TO (DER) 2013-01.

1 A320-214 (5679, B-9982), EX-(B-519L), LEASED TO (CHO) 2013-10.

2 A320-232 (4569, EX-(D-AVVB) FOR CHINA WEST AIR (CHO) OPERATIONS, (4580), EX-(F-WWIH) FOR (HNA) 2011-01.

1 A330-223 (1034, F-WWKO), (CRY) LEASED 2010-08, EX-(F-WJKN).

3 A330-243 (TRENT 772B-60) (875, B-6116 2007-11; 919, B-6089, 2008-04; 1020, F-WWYL; 1591, B-5979, 2015-01), 36F, 186Y.

3 A330-243 (TRENT 700) (906, /08 B-6088; 982, /09 B-6133; 988, F-WWKI, 2009-02), (ILF) LEASED. 906; EX-(F-WWYD). 36F, 186Y.

1 A330-243 (TRENT 700) (881, B-6118), (TCI) LEASED 2007-12. 36F, 186Y.

2 A330-243 (TRENT 772B-60) (1286, /12 B-LNK; 1322, B-LNL), (CRY) WET-LEASED 2012-11. 34F, 82C.

3 A330-243F (TRENT 772B-60), (CSL) LEASED. FREIGHTER:

11 A330-300.

6 A330-343E (1178, B-6527; 1190, B-6529; 1438, B-5935, 2013-08; B-5950; 1663, B-8016, 2015-09; 1703, B-8287, 2016-01), EX-(F-WWKG, F-WWYP, & F-WWKP), 2011-01, 2016-01.

2 A330-343E (1614, B-5971, 1855, B-1048), AVOLON LEASED 2018-02.

1 A330-343X (1325, B-5903), EX-(F-WWTL), (CRY) LEASED 2012-07.

0 A340-642 (TRENT 556-61) (436, /02 B-HQA; 453, /02 B-HQB; 475, /03 B-HQC), EX-(CAT), (ILF) 6 YEAR LEASED. ALL 3 RETURNED 2014-04. 8F, 60C, 220Y.

0 B AE 146, EX-(CNW). RETIRED 5.



32 +23/5 ORDERS FAIRCHILD DORNIER 328-310 JET (PW306B FANJET, 6,053 LBS THRUST) (3123, /99 B-3960; 3128, /99 B-3961; 3133; 3135 /00 B-3966; 3136; 3138, /00 B-3963; 3140, /00 B-3965; 3143, /00 B-3962; 3144, /00 B-3967; 3148, B-3968; 3153, /00 B-3969; 3154, /00 B-3970; 3158, /00 B-3973; 3159, /00 B-3975; 3172, /00 B-3971; 3175 /00 B-3972; 3177, /01 B-3976, 2001-03; 3182, B-3977, 2001-05; 3187, /01 B-3978; 3191, /01 B-3979; 3195, /01 B-3982; 3198, /02 B-3949, 2005-09; 3203, /03 B-3947; 3204, /03 B-3950; 3208, /03 B-3946, 2005-09; 3211, /03 B-3983; 3215, B-3985, 2004-03; 3217, B-3986, 2004-03; & 3218, B-3987, 2004-03), 2,222 KM RANGE, REPLACED METROS, 32Y.




3 BOMBARDIER DASH 8-402 (4005; 4006; 11/00) (4039, B-3569, 2001-10) CHANGAN (CGN) OPERATIONS.


1 CESSNA 208 GRAND CARAVAN (00354, B-3639), 2002-08.


1 +49 ORDERS EMBRAER E190 (0268, B-3151, 2009-03), FOR (GCE) OPERATIONS. 106Y.



Click below for photos:
HNA-2-Captain Sun Jianfeng - 2017-10.jpg
HNA-7-Jason Liu 2017-10.jpg


Wang Jian suffered "severe injuries" in a fall and died July 4th, aged 57. He graduated from the Civil Aviation University of China and received an (MBA) from the Maastricht School of Management in the Netherlands.









XIE HAOMING, PRESIDENT (hm_xie@hnair.com).
Xie HaoMing was formerly Director Technical Services.





JASON LIU, VP COMMERCIAL & Chief Marketing Officer (CMO) (2017-10).
Jason was responsible for Strategy & Vision Planning; Sales & Marketing Leadership; Profitability & Cost Analysis; Negotiations & Strategic Alliances.

Before (October 2016 to October 2017) he was the Chief Marketing Officer responsible for developing business strategies as the essential member of senior management team, and implementing medium to long term strategic marketing plans. He directed the regional and international marketing organization. Jason spearheaded vision, strategy, and execution of performance-drive business operations.

Earlier (August 2013 to October 2016) as Director, Marketing, Jason
directed development of company-wide strategy and business plan for all organizations falling under the Hainan Airlines (HNA) Cloud Platform. He ensured on-target delivery of >20 long haul and short haul flights, covering 31 cities in 19 regions in North America, Europe, Australia, and SE Asia.

Prior to that (March 2010 to August 2013) he was Director, International Business when he established marketing and sales objectives. He oversaw staffing, strategic directives, and transition between international and domestic trunk and feeder lines. He connected European, American long-haul flights through optimization from Xi’an, Chongqing, Changsha and the domestic Shanghai route network. He report to the Marketing Director.

Before that (March 2007 to March 2010) as Manager, International Route Development, he participated in research and development of international business planning, international route development, marketing promotion and revenue management. Jason acquired traffic rights for American and Canadian flights, and gained operating permits for >10 new routes connecting Vietnam, Cambodia and Laos.

His education included an (MBA) gained in 2009 at City University and an earlier Bachelor of Arts from the Civil Aviation University of China.













CHEN NING, CHIEF ENGINEER (chenning@hnair.com).


CAPTAIN XING TAO, 787 FLEET MANAGER (xingtao@hnair.com).












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