Some good news for embattled Chinese conglomerate HNA as airline unit sees profits rise
Uncertainty still hovers around Hainan Airlines however as competition heats up, while its parent still wrestles with huge debts
Hainan Airlines Holding, the flagship aviation unit of Chinese conglomerate HNA Group, reported a 5.9 per cent profit rise for 2017, but uncertainty remains over the outlook for the carrier as its parent wrestles with huge debts.
The Hainan province-based airline said late on Thursday that it earned 3.32 billion yuan (US$524 million) last year on revenue of 59.9 billion yuan, in line with a median forecast of 3.32 billion yuan in a Bloomberg survey of analysts.
“Uncertainty still revolves around the airline,” said Ivan Li, an asset manager with hedge fund group Loyal Wealth Management. “A potential asset restructuring is expected to affect the company’s fundamentals heavily.”
Hainan Airlines was founded by Chen Feng in 1993, and counted US billionaire George Soros among its early investors. Its parent, HNA, emerged as a powerful conglomerate that went on an aggressive spree of asset purchases around the globe, including taking stakes in hotel group Hilton Worldwide Holdings and in Deutsche Bank.
But HNA is now under pressure to sell assets to cut its huge debt levels after coming under regulatory scrutiny at home and abroad. Media reports have also said that some banks had frozen unused credit lines to HNA units.
Shares of Hainan Airlines have been suspended from trading since January 11 after it announced a potential asset restructuring. The company did not say when trading would resume.
