Hainan Airlines' parent firm has cut its order of 50 Embraer jets to 25, due to a shortage of pilots and weak demand caused by the financial crisis.
Harbin Embraer Aircraft Industry Co Ltd, a joint venture by Hafei Aviation Industry Co Ltd and Brazil-based Embraer, will deliver 25 ERJ145 regional jets to HNA Group by 2011, according to their new contract.
Harbin Embraer signed a US$1.1 billion contract with the group in 2006 to deliver 50 regional jets by the end of 2010. The jet maker has delivered 12 jets by March 2009.
"The financial turmoil and shortage of pilots made the two sides adjust the previous contract," Hafei, which holds a 24.5-percent stake in the venture, said in a statement to the Shanghai Stock Exchange yesterday.
China's aviation regulator has unveiled stimulus measures in a move to boost struggling domestic carriers, including urging them to cancel or postpone plane deliveries and park unnecessary planes, retire old ones and return aircraft leased from overseas.
China Eastern Airlines said on Monday it will sell two Airbus jets for a total of 590 million yuan (US$86.5 million) and lease them back to boost its cash flow.
Hainan Air, the country's fourth-largest carrier, posted a net loss of 1.42 billion yuan last year, compared with a 627 million yuan profit in 2007, due to the economic downturn and domestic natural disasters that dampened demand.
The Haikou-based carrier aims to handle 19.64 million passengers this year, rising 36.65 percent from last year, and 284,200 tons of cargo, an increase of 52.39 percent.
"The company is estimated to require 24.33 billion yuan this year to achieve the target," the carrier said.
It already returned to the black in the first quarter of this year with a profit of 31 million yuan, but that was down 88.9 percent from a year earlier.
"We estimate the Hainan government, the carrier's controlling shareholder, will inject cash to support its expansion and reduce liability-to-°?assets ratio," said Wu Li, an analyst from Guotai Jun'an Securities Co.
(Shanghai Daily May 6, 2009)
