China’s embattled HNA Group announced Saturday it would be taken over by Hainan’s provincial government, saying in a statement that attempts to “self-rescue” had so far failed and that the COVID-19 novel Coronavirus outbreak had heightened still further the risk to its fragile liquidity. There had been rumours of HNA Group holding secret negotiations with local government officials for several weeks.
The HNA Group can trace its history back to 1989 when the then provincial carrier Hainan Airlines was formed. The company quickly grew and the parent company was formed in 1993 as other airlines and related businesses were snapped up by HNA.
According to its official website, at one point HNA Group owned 14 airlines and operated a fleet of around 900 aircraft. The group also spread its reach into the wider tourism sector buying up assets around the world, including shares in Hilton Hotels and ground handling agent Swissport.
But HNA Group has struggled to balance its massive debt burden in the last few years and has been forced to sell-off prized assets in an attempt to service its debt pile and see off an impending liquidity crisis.
In a short statement, HNA Group said the Hainan provincial government had led a project and formed a Joint Working Group to save the ailing aviation group. According to a February 20 Bloomberg report, the group’s assets may be split between other Chinese carriers.
According to SCMP, the decision to bring different Chinese airlines under one umbrella group was the first attempt by Beijing to improve the efficiency of China’s aviation sector.
Along with Hainan Airlines, the group also includes Beijing Capital Airlines, Lucky Air and Tianjin Air. HNA Group also owns a stake in heavily loss making Hong Kong Airlines.
HNA Group reported a loss of 1.08 billion yuan in the first half of 2019 alone.
