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Chinese authorities may take over HNA amid coronoavirus disruption

By Ramla Soni

The government of Hainan, where HNA is based, is in talks to take control of the group which directly controls local carriers, including its flagship Hainan Airlines

Chinese authorities plan to take over HNA Group Co and sell off its airline assets. This is because the coronavirus outbreak has impacted the conglomerate’s ability to meet financial targets.

The government of Hainan, where HNA is based, is in talks to take control of the group, Bloomberg first reported. HNA directly controls or holds stakes in a number of local carriers, including its flagship Hainan Airlines.

Under the plan, China would sell the bulk of HNA’s airline assets to the country’s three biggest carriers – Air China Ltd, China Southern Airlines Co and China Eastern Airlines Corp.

HNA Group was once one of China’s most aggressive deal-making firms, spending $50bn on acquisitions that included stakes in Deutsche Bank and Hilton Worldwide and prime property in New York, Sydney and San Francisco.

It began unwinding many of its acquisitions to focus on its core airlines and tourism businesses after it ended up in high levels of debt from its shopping spree, causing regulatory scrutiny.

In December, HNA chairman Chen Feng said the firm had delayed some salary payments in 2019 due to cash flow shortages, but intends on resolving liquidity risks this year.

However, the airline industry has faced a lot of pressure so far this year with the coronavirus outbreak causing airlines to cancel thousands of flights.

Hainan Airlines and others have tried to cut their losses by putting foreign pilots on unpaid leave. Hong Kong Airlines, also part-owned by HNA, has said it will cut 400 jobs.

China’s aviation regulator has said it would support restructurings or mergers to help airlines deal with the epidemic.

FURTHER READING: China gradually returns to work amid coronavirus disruptions

FURTHER READING: Coronavirus: BA suspends China flights as evacuation race begins

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