The Hainan government is said to be planning to take over HNA Group and sell off its airline assets, as the indebted conglomerate’s ongoing struggles to meet its financial obligations reach a crisis point.
The provincial government has been forced to make the move as the impact of COVID-19 on HNA’s airline businesses – which include HNA Airlines and Hong Kong Airlines – has hit the conglomerate’s cashflow, according to a source cited in Bloomberg.
With the owner of 14 airline companies having reportedly placed its foreign pilots on unpaid leave two weeks ago, HNA’s management is said to be locked in talks with officials of its home province regarding the take over as travel restrictions imposed to combat the spread of the virus grounded two-thirds of China’s flights.
Under the plan, which is still being formalised, the government would sell most of HNA’s airline assets to the mainland’s big three carriers, Air China, China Eastern Airlines and China Southern Airlines.
Market analysts say that HNA’s entire RMB 1 trillion ($142 billion) asset portfolio might end up being put on the market, with the government seeking buyers for the group’s real estate holdings, including hotels and residential buildings in Hainan, Beijing and Shanghai.
HNA Group had not replied to an enquiry from Mingtiandi at the time of publication.
Taking Over a Failing Business
HNA has been racing to sell off assets, including its property holdings, to meet debt payments following a $50 billion spending spree on overseas assets that saw