Longjiang Airlines is auctioned, and the aviation industrial structure is expected to be further adjusted

 Longjiang Airlines is auctioned, and the aviation industrial structure is expected to be further adjusted

In July, the Civil Aviation Administration of China (hereinafter referred to as CAA) has disclosed to the outside world that the loss of the whole industry in the first half of the year exceeded 74 billion yuan. Therefore, the outside world has long expected the loss disclosed by the financial report of the aviation enterprises in the first half of the year.

According to the financial reports released by the four largest aviation enterprises in China, namely, Air China (hereinafter referred to as Air China), China Eastern Airlines Co., Ltd. (hereinafter referred to as China Eastern Airlines), China Southern Airlines Co., Ltd. (hereinafter referred to as China Southern) and Hainan Airlines Holding Co., Ltd. (hereinafter referred to as HNA Holdings), the first half of this year saw the growth of Chinas largest aviation enterprises, Air China achieved a revenue of 29.646 billion yuan, a year-on-year decrease of 54.61%, and a net loss of 9.597 billion yuan; China Eastern Airlines achieved an operating income of 25.13 billion yuan, with a net profit attributable to the shareholders of the listed company of RMB - 8.54 billion yuan; China Southern Airlines achieved a revenue of 38.964 billion yuan, a year-on-year decrease of 46.58%, and a net loss of 8.174 billion yuan attributable to the listed shareholders. HNA holdings became the largest domestic airline company with the largest loss in the first half of the year, with an operating revenue of 11.712 billion yuan, a year-on-year decrease of 66.57%, and the net profit attributable to shareholders of listed companies was -11.823 billion yuan.

The total loss of the four major aviation groups in the first half of the year reached 38 billion yuan. However, the last big loss of the whole civil aviation industry had to go back to 2008. At that time, due to the global economic crisis and fuel hedging losses and other factors, the whole industry suffered a total loss of 28 billion yuan. At that time, the state owned assets supervision and Administration Commission of the State Council, as a major shareholder of state-owned aviation enterprises, once injected huge funds into some airlines to prevent them from breaking down Production.

Of course, todays civil aviation of China is no longer the same in terms of volume, competitiveness and risk resistance. It not only invests a large amount of resources to participate in medical rescue and material transportation during the epidemic period, but also maintains the continuous navigation between China and most major navigation countries after almost cutting off most international routes by foreign airlines. At the same time, it can also invest transportation capacity to participate in the domestic and international transportation of various materials, to a certain extent, slow down the huge loss caused by the shrinkage of passenger transport business.

In addition to several major aviation enterprises, Spring Airlines Co., Ltd. (hereinafter referred to as Chunqiu Airlines) and Jixiang Airlines Co., Ltd. (hereinafter referred to as Jixiang Airlines) also suffered losses of 409 million yuan and 675 million yuan in the first half of the year, while another private aviation enterprise, Huaxia Airlines Co., Ltd., mainly engaged in branch business and operated in the mode of combining trunk and branch (Part 2) Although its net profit fell by 94.15%, it became the only airline in Chinas civil aviation industry to make profits in the first half of the year, and its revenue fell only about 20%, far below the average decline level of the industry.

An auction notice

If a large-scale aviation group can rely on the family wealth accumulated by enjoying the good time of the civil aviation industry for more than ten years, to a certain extent, carry for a period of difficult years. However, for some airlines that have already had various problems before the outbreak of the epidemic, the rapid change of market conditions may mean disaster.

On August 28, on the online judicial auction platform of the e-commerce platform Jingdong Mall, an auction announcement of the subject matter named about the project of partial equity value of shareholders corresponding to 98% equity of Longjiang Airlines Co., Ltd. was hung up. The announcement said that part of shareholders equity of Longjiang Airlines Co., Ltd. will be publicly auctioned through Jingdong online judicial auction platform from 10:00 on September 29 to 10:00 on September 30, 2020 Value project (Harbin Yaxiang Aviation Construction Investment Co., Ltd. holds 61% equity of Longjiang Aviation Co., Ltd., and Harbin Xiangyu gold products Sales Co., Ltd. holds 37% equity of Longjiang Aviation Co., Ltd., a total of 98% equity)

Longjiang Airlines is one of the few private aviation enterprises that has been approved in the window opportunity of opening trunk passenger airlines to private capital in China. It was established by Harbin Xiangyu gold products Sales Co., Ltd. in 2014, approved and issued business license in 2016, and obtained operation qualification and put into operation in early 2017.

It is rare for Longjiang airlines to set up an aviation enterprise based on investors without aviation industry or related industry operation background. Although trunk airlines had several rare access windows and did not exclude private capital, it was very difficult to obtain qualification. Too many investors with strong capital strength and even local government background formed a queue waiting for approval We have to wait for several years. A person who once worked for a private airline in China said in an interview with the China Times: the approval of Longjiang airlines may have a certain relationship with the lack of real aviation enterprises in Northeast China. In addition, although Heilongjiang Province has a large number of airports and well-developed navigation, civil aviation has not been able to match the local ambition. At the same time, Heilongjiang is developing people The aviation industry has also put forward a concept of bridgehead radiating Northeast Asia and even North America, which the local government has great enthusiasm to promote.

But the goal and enthusiasm are on the one hand, for the civil aviation industry, which eats resources and is very professional, just having money and a license does not mean that it can support the operation of an airline. Some of the hidden dangers have actually been buried from the beginning.

In June 2016, two years after Longjiang Airlines was approved to prepare for construction, it introduced its first Airbus A321 through China Aircraft Leasing Co., Ltd. (Calc) registered in Hong Kong. The aircraft originally operated by Niki aviation in Austria did not change its original coating It arrived in Harbin and delivered it to Longjiang airlines. Subsequently, Longjiang Airlines introduced one A321 and one A320 aircraft respectively through AVIC leasing and BBAM leasing companies, which met the capacity requirements of the regulatory authorities for the establishment of the new airline.

However, no one has thought that the fleet size of Longjiang Airlines has remained at the scale of 3 from the beginning of its establishment to the first half of this year. Several new airlines approved to be established around 2014, such as Jiuyuan airlines, which was approved to be built in 2014, has reached 20 aircraft fleet, and Qingdao airlines, which started operation in 2014, has now reached 26. Beibu Gulf airlines, Ruili airlines and Fuzhou airlines, which were also approved for construction in 2014, have reached 27, 20 and 16 aircraft fleets respectively.

These companies either rely on other major airlines or have the support of local governments and large consortia. However, many changes have taken place, such as the complete withdrawal of Nanshan Group, the investor of Qingdao airlines, and the takeover of Qingdao municipal government. Laterite Airlines accepted the capital injection from Hunan provincial government and moved to Changsha. Ruili airlines also signed an agreement with Wuxi Municipal government just last month to transfer its majority stake, the person who once worked in a private airline company told our reporter, under normal market conditions, there are already so many small and medium-sized airlines that cant stand up. Whats more, in the market downturn that may be faced in the next few years, although there is still room to dig in, the domestic market is still large The environment will not give small and medium-sized Airlines too much patience, and companies with insufficient strength and resources will not have enough time to survive the cold winter of the industry.

For airlines, aircraft is one of the core assets. The spread of route network layout and the improvement of flight volume need corresponding fleet size matching. The growth of the fleet size is not only about buying airplanes, but also needs a series of qualified personnel, such as pilots, flight attendants, maintenance personnel, etc., as well as the matching of service support resources. Therefore, from the perspective of the entry threshold of the aviation industry, it seems that it is not high, but the investment needed to carry out operation and follow-up development will be higher and higher, he said Enterprise personnel said to the reporter of China times.

The aircraft transaction between Longjiang airlines and AVIC has become a lingering shadow in the four-year history of the company. One of the A321 aircraft with production line number msn4611 could not be put into operation due to engine failure. Therefore, Longjiang Airlines stopped paying the total rent of 44.33 million U.S. dollars for the 12-year lease period of the aircraft. For this reason, the two sides went to court three times, fighting the lawsuit from the high court of Heilongjiang Province to the Supreme Peoples court. Finally, Longjiang Airlines was found to be in breach of the contract. It was required to pay part of the arrears, including rent and taxes, to AVIC leasing and return the aircraft.

In the past three years, one of the aircraft involved in litigation was reduced to dismantling parts because it could not be put into operation. Longjiang Airlines operated a few routes with only two airplanes, but it also suffered the cost. In the notice and punishment notice of Civil Aviation Administration on flight irregularity rate, Longjiang Airlines often made a name on the list.

Find the supplier?

In the past few years, Longjiang Airlines has also experienced several changes in the ownership structure and the actual controller of the company.

All along, the civil aviation industry has known that the management of Longjiang Airlines hopes to sell the shell. Due to the strict restrictions imposed by the Civil Aviation Administration on the approval of Shinkansen airlines, and in recent years, the air transport industry is more active in terms of the industry prospect itself and the willingness of the local government to participate. Therefore, if Longjiang Airlines wants to sell, it will not worry about the bidders.

Even in this year, when the whole industry was in a low ebb due to the impact of the epidemic, Longjiang Airlines actually rented two A320 aircraft from DAEC capital from June to July, and opened a new route last month.

According to an industry source, this situation is also due to the entry of new capital, which gives the company a chance to breathe. But I didnt expect that the auction announcement would follow.

According to the auction announcement, an asset appraisal report on Longjiang aviation issued in early January this year holds that the book value of the companys net assets is 411.8354 million yuan on the benchmark date of August 31, 2019, and the total equity value of shareholders after evaluation is 419.2998 million yuan, and the evaluation value-added is 7.4644 million yuan, with a value-added rate of 1.81%. The evaluation price of the auction was 410.9138 million yuan, and the starting price was 328.73104 million yuan.

Although from the auction price and asset evaluation results, as a scarce resource of trunk airline license, the cost of bidding is not high, but considering the huge difference between the asset evaluation and the current operating environment of the civil aviation industry, as well as the huge problems of personnel placement and debt, it is not difficult to understand why the cost of bidding for more than 1 billion yuan is huge Its almost a cabbage price situation.

(function(){( window.slotbydup=window .slotbydup||[]).push({id:u5811557,container:ssp_ 5811557, async:true }Source: Cui Yuwei, editor in charge of China Times_ NBJS11349