China’s government is poised to take over HNA Group as coronavirus outbreak grounds airline fleet, scuppers business
- The provincial government of Hainan in southern China, where HNA Group is based, is in talks to seize control of the group, according to people familiar with the plans
- Under the plan, China would sell the bulk of HNA’s airline assets to the country’s three biggest carriers – Air China, China Southern Airlines and China Eastern Airlines
The government of Hainan, the southern island province where HNA is based, is in talks to seize control of the group after the contagion hurt its ability to meet financial obligations, according to people familiar with the plans.
The once little-known airline operator shot to prominence between 2016 and 2017 after a debt-fuelled acquisition spree, becoming for a time the leading shareholder of iconic companies such as Hilton Worldwide Holdings and Deutsche Bank, while paying top dollar for properties from Manhattan to Hong Kong.
China is under growing strain from the shutdowns imposed to curb the coronavirus, which has killed more than 2,000. As President Xi Jinping seeks to prevent the short-term economic pain from turning into a slump that outlasts the contagion, his government is considering direct cash infusions or mergers to stabilise the hobbled airline industry, while the People’s Bank of China said it will work on supporting domestic consumption. A takeover of a high-profile corporate would take those efforts to a new level.
An announcement could be made as soon as Thursday, though talks could drag on or fall apart, the people said, asking not to be identified as the discussions are confidential. Under the emerging plan, China would sell the bulk of HNA’s airline assets to the country’s three biggest carriers – Air China, China Southern Airlines and China Eastern Airlines, according to the people. Discussions with the airlines are continuing, they said.
A representative for HNA couldn’t immediately comment. Calls and messages to Hainan government officials and press officers at the three state-run airlines weren’t immediately returned after regular business hours in China.
