Genghis Khan Airlines Owner Faces Financial Setbacks as Ukraine Suspends Debt Payments

The parent company of Genghis Khan Airlines, Beijing Tianjiao Aviation Industry Investment Co, also known as Skyrizon, is encountering significant financial challenges in retrieving funds from Ukraine following its unsuccessful attempt to acquire the Ukraine-based aircraft engine manufacturer Motor Sich. The situation has been exacerbated by Ukraine’s recent decision to halt all foreign debt repayments until October.

Ukrainian President Volodymyr Zelensky signed a decree suspending all foreign debt payments until October 1, following Kyiv’s restructuring agreement with major bondholders that concluded on August 1. This agreement was crucial in preventing a financial default in July.

This suspension poses further obstacles for Beijing Tianjiao Aviation Industry Investment. The company, along with other Chinese investors, had previously demanded compensation exceeding USD 4.5 billion before an arbitration court in The Hague. This claim came after Ukraine nationalized Motor Sich, which also operates Motor Sich Airlines. The nationalization occurred despite the Chinese investors purchasing a 56% stake in Motor Sich in 2016 and submitting required antimonopoly documentation to Ukrainian authorities in 2019.

Complications deepened when the Security Service of Ukraine seized the shares held by the Chinese stakeholders in 2021, leading to the nationalization of Motor Sich. Subsequently, Ukraine imposed sanctions on the Chinese companies and Beijing Tianjiao’s co-owner, Wing Jin. Ukraine’s Foreign Ministry has acknowledged the investors’ right to compensation under the investment contract.

The saga also includes the arrest of former Motor Sich CEO Vyacheslav Boguslaev in 2021, who was accused of transferring military goods to occupiers, specifically aircraft engines to Russia. Furthermore, Boguslaev lost a significant court case in July before the High Anti-Corruption Court of Ukraine, resulting in the seizure of his assets valued at over UAH 12 billion (approximately USD 293 million). These assets are now managed by Ukraine’s State Property Fund. The case also involved Petr Kononenko, the former head of Motor Sich’s Moscow office.

Despite these challenges, Beijing Tianjiao’s Genghis Khan Airlines resumed operations in September 2022 after entering bankruptcy protection. The airline currently operates a fleet of six ARJ21-700 aircraft, according to the ch-aviation fleets module. This resumption marks a crucial step in the airline’s recovery, albeit under the shadow of ongoing financial and legal disputes involving its parent company and Ukrainian interests.

Sources: AirGuide Business airguide.info, bing.com, ch-aviation.com