Hong Kong Airlines Ltd, backed by China’s fourth-largest carrier Hainan Airlines Co Ltd , has threatened to cancel an aircraft order with Airbus, underlining growing tensions between China and the European Union over the EU’s emissions trading scheme, a local newspaper reported.

The Hong Kong-based regional carrier said it was under pressure to cancel its order for 10 Airbus A380 aircraft with a list value of $3.8 billion, the South China Morning Post reported on Thursday.

"We cannot do something which is against our country’s interests," the newspaper quoted airline President Yang Jianhong as saying.

In February, China banned its airlines from participating in the European Commission’s airline emissions trading scheme (ETS) without approval, saying it violated international law.

"I cannot confirm this (possible order cancellation) and I have no comment on this," said Kenneth Thong, head of corporate governance and international affairs at the carrier.

Established in 2006, the Hong Kong-based carrier is controlled by Hong Kong Airlines Holding Ltd, which counts Hainan Airlines and Hainan Airlines’ parent HNA Group among its top shareholders.

The carrier, which has a fleet of 14 aircraft including six A330-200s and eight Boeing 737-800s, is taking delivery of eight to 10 aircraft this year, its spokeswoman told Reuters in January.

Hong Kong Airlines is planning an initial public offering in Hong Kong in the third quarter, aiming to raise about HK$5 billion ($643.88 million).

It operates scheduled flights to eight cities in China and other parts of Asia and Europe, including Indonesia, Japan, Singapore, Thailand, Vietnam, and Russia.

Plans to announce the high-profile A380 deal between Airbus and Hong Kong Airlines were called off at the Paris Airshow last June because of China’s anger over European plans to charge airlines for emissions, Industry sources said.

Hong Kong Airlines only confirmed its order for the double-decker A380 months afterwards.

China has threatened to hold back on purchasing Airbus aircraft in retaliation against the airline emissions fee scheme.

The scheme, which levies charges for carbon emissions on flights in and out of Europe, has also drawn the ire of other countries, including the United States and India. Foreign governments argue that the EU is exceeding its legal jurisdiction by calculating the carbon cost over the whole flight, not just Europe.

 
  

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