HNA Group may cancel order for 10 A380s - chairman

BEIJING Fri Nov 9, 2012 11:30am EST

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BEIJING Nov 9 (Reuters) - HNA Group, China's fourth-largest aviation group, is in talks with Airbus and may cancel its order for 10 A380 aircraft with a total list price of $3.8 billion due to weak market conditions, chairman Chen Feng said on Friday.

The order has faced uncertainty due to a row between China and the European Union over airline emissions charges.

European planemaker Airbus said in March China had blocked the purchase of 35 long-haul A330s and 10 Airbus A380 superjumbos worth a total of $12 billion.

While Airbus did not name the airlines involved, industry sources said the A380s were earmarked for Hong Kong Airlines, a unit of the HNA Group, which also owns Hainan Airlines Co Ltd .

Chen said the A380s were ordered when the market was good and now the group had to consider the potential for a prolonged period of global economic weakness.

"A380 is such a big aircraft, in these years, 10 of them, who has such strength (to buy)," Chen told reporters on the sidelines of the ruling Communist Party's congress in Beijing.

HNA, which bought a 48 percent stake in France's second-largest airline Aigle Azur last month, was in talks with Airbus over the A380 order and would announce the results later, he said.

Hong Kong's aviation regulator halted the expansion of Hong Kong Airlines earlier this year following complaints about its service standards and casting doubts about the carrier's new plane orders.

Chen said HNA would continue to order new aircraft next year. "We have to buy new planes but whether we need to order that many and that soon is another matter."

The group will continue to expand overseas via acquisition, he added.

Founded in 2000, HNA Group is involved in air transportation, logistics, financial solutions, tourism, real estate, retailing and airport management businesses.

At the end of 2011, it had total assets of $46 billion. (Writing by Alison Leung; Editing by Mark Potter)

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