HNA Group Could be Forced to Sell Airline Assets Due to COVID-19 Impact
On February 19, Bloomberg reported that China is considering taking control some of HNA Group’s airlines that have been unable to meet financial obligations. Those familiar with the plans say HNA Group will spin off into the three major state-owned airlines in the near future, namely Air China, China Southern Airlines and China Eastern Airlines.
According to the Bloomberg report, the Hainan Provincial Government, will announce the control of HNA and earmark its assets to local companies in the province.
HNA Group Co., Ltd., is a Chinese conglomerate headquartered in Haikou, Hainan, China. Founded in 2000, the company is involved in numerous industries including aviation, real estate, financial services, tourism, logistics, and more. At present, HNA Group holds a total of 11 airlines in China and Hong Kong, including Suparna Airlines, Beijing Capital Airlines and Lucky Air (based in Kunming). It is rumored that the main body of HNA will be split into Air China, while the remaining part will be allocated by China Southern Airlines and China Eastern Airlines.
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However the rumor was later denied by a top executive from HNA Group in a phone call with reporter from China Business News. According to the executive, he never learned anything about the takeover, sale of assets or reorganization of HNA Group, commenting, “HNA Group has not disclosed any relevant situation as in the rumors, nor do we know where these rumors came from. The company hasn’t made any of these moves.”
Due to the coronavirus outbreak, the Chinese domestic aviation industry has encountered a massive downturn. According to data from the Civil Aviation Resources Network, as of morning on February 18, there were 13,800 domestic flights planned, 4,085 flights scheduled to be executed, and 9,738 flights cancelled. In terms of international flights, among 4,036 international flights were planned on the same day, 1,572 flights were expected to be executed, and 2,464 flights were cancelled.
