China plans to take over Hainan Airlines Group: report

21 Feb 2020 by Jackie Chen
Hainan Airlines A330-300

China is reportedly planning to take over Hainan-based Hainan Airlines Group (HNA Group) and sell off its airline assets, Bloomberg reports citing people familiar with the matter.

The government of Hainan, where the group is headquartered, is in talks to take control of the conglomerate after the recent coronavirus outbreak in mainland China hurt its ability to meet financial obligations, according to the report.

The HNA Group owns or holds stakes in a number of airlines, including Hainan Airlines, Hong Kong Airlines, Tianjin Airlines, Beijing Capital Airlines, Lucky Air, Suparna Airlines, Fuzhou Airlines, West Air, Urumqi Air, Air Guilin, GX Airlines and Air Changan. The group also owns 25 per cent of Hilton Worldwide.

Bloomberg’s report also said that the Chinese government will sell the group’s airline assets to the three largest airlines in the country, also known as China’s “big three” airlines, namely Air China, China Eastern Airlines and China Southern Airlines.

Business Traveller Asia-Pacific has reached out to the HNA Group for comment.

Chinese news website Chinese Business Journal reports that a senior executive of Hainan Airlines Group denied the news and said he had never heard of any news about the group being taken over or reconstructed during a phone interview with the publication on Thursday morning.

There’s no official announcement from the HNA Group as of writing this story.

The Coronavirus outbreak, which originated in the Chinese city of Wuhan, has resulted in more than 75,000 people being infected by the virus and more than 2,000 deaths in China, according to the South China Morning Post. Airlines around the world have cut flights and suspended routes to destinations in Asia due to a drop in demand as the virus continues to spread.

Hong Kong Airlines A350-900 - Credit: Airbus/P. Pigeyre/master films

A look back at Hong Kong Airlines’ woes

Last year, the HNA Group-owned Hong Kong Airlines risked having its flying license revoked by Hong Kong’s Air Transport Licensing Authority due to its ongoing financial difficulties. The airline announced many route cuts and the suspension of its in-flight entertainment system last year.

The airline managed to avoid having its flying license suspended after the HNA Group secured a four billion yuan (US$568 million) three-year loan from eight Chinese banks, with each providing 500 million yuan (US$71 million) last December.

However, Hong Kong Airlines has come under more pressure in the wake of the coronavirus outbreak which has forced a number of airlines to suspend flights, limit their in-flight services and lay off employees in the face of dwindling demand. Hong Kong Airlines announced earlier this week that it will stop offering in-flight meals to passengers onboard, close one of its lounges at Hong Kong International Airport, and sack 170 employees.

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