Yesterday, a piece of breaking news about Hainan Airlines and parent HNA Group suddenly appeared on Weibo.
The news states that Hainan Airlines is going to be taken over by Air China; with its subsidiary Suparna Airlines to be sold to the Jiangsu Province government. The rest of HNA to be separated between China Eastern and China Southern.
The background of the news is from the day before. Ren Hongbin, the vice Chairman of the State-owned Assets Supervision and Administration Commission of the State Council (SASAC), made a statement on the State Council Information Office (SCIO) press conference. He said
“Chinese airlines’ reorganization and integration needs to happen under the company’s own wishes and needs to fit the company’s own development plan. Airlines’ current mission is to fight the coronavirus outbreak and perform charter flight.”
Ren Hongbin, the vice Chairman of the State-owned Assets Supervision and Administration Commission of the State Council (SASAC)
In December HNA chairman Chen Feng said the firm had faced cash flow shortages that forced it to delay some salary payments in 2019, but vowed to resolve its liquidity risks this year.
On Wednesday Bloomberg News reported that China plans to take over HNA Group and sell off its airline assets, as the corona virus outbreak had further hit the Chinese conglomerate’s ability to meet financial obligations.
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.
After the corona virus outbreak, Hainan Airlines cancelled all of its international routes. 15 widebody aircraft, including Airbus A330 and Boeing 787, are currently grounded at Beijing Daxing Airport.
Yesterday Hainan Airlines transported six medical teams from Hainan to Wuhan; an Airbus A330 performed this charter.
The whole HNA Group has transported 2000 medical personnel and 770 tons of supplies. The cost is nearly ¥30 million CNY ($4.3 million).
Earlier today, HNA Group responded that the founder and Chairman of HNA Group and Hainan Airlines, Chen Feng, went to the HNA Group Haikou hub to visit employees and to investigate the recovery of operation and production. The end of the article emphasised that over 660 aircraft, and 1400 routes, of HNA Group are ready to provide support to fight against the corona virus outbreak.
In 2019 Hainan Airlines cancelled leases for Airbus A350-900s, Boeing 787-9s and Boeing 737s.
Airbus last month announced a surprise order for 40 of its A330neo wide-body aircraft, worth $12 billion at list prices, but the buyer’s identity was kept under wraps.
The sources said the order, dated Dec 23rd, came from HNA Group airlines and reflected efforts already in place to carry out a restructuring of fleet plans, this would see some previously unfulfilled jet orders fall by the wayside.
“HNA is, even by Chinese standards, a sprawling and indebted conglomerate, and the collapse in Chinese airline activity due to the outbreak of Covid-19 has apparently pushed it to effective bankruptcy,”
London-based Agency Partners analysts, led by Nick Cunningham, wrote in a note after Bloomberg’s report.
Sources consist of various Weibo account, WeChat Official accounts and carnoc.