The parent company of Hainan Airlines, the HNA Group, has reportedly gone bankrupt. The Hainan Provincial higher People’s Court has issued a notice stating that creditors have applied for the group’s bankruptcy as they cannot pay off their due debt. As well as Hainan Airlines, HNA Group has control of 13 further airlines and a global fleet of 900 aircraft. Hainan Airlines has confirmed it is operating as normal, for now.
HNA Group goes bankrupt
The HNA Group is one of the most prolific but largely unrecognized investors in the world. With more than 2,300 companies falling within its group, it strived to obtain a place in the Fortune 100, but its copious spending over the years has come to a crunch in recent months.
Today, the group has received notice that bankruptcy proceedings will commence. The situation has thrown the future of Hainan Airlines and many other aviation-related businesses into doubt. In a statement, the group said,
“On January 29, 2021, our group received the “Notice” issued by the Hainan Provincial Higher People’s Court. The main content is: the relevant creditors applied to the court for bankruptcy and reorganization of our group because our group could not pay off their due debts.
“Our group will cooperate with the court to conduct judicial review in accordance with the law, actively promote debt disposal, and support the court to protect the legal rights and interests of creditors in accordance with the law to ensure the smooth progress of production and operation of the enterprise.”
HNA Group has involvement in 14 different airlines, and maintains a fleet of more than 900 aircraft. It was thought to have assets of at least one trillion yuan ($154.8 billion) and around 500 billion yuan ($77.6 billion) of debt.
What does this mean for HNA Aviation?
The HNA Group has its fingers in many pies, from logistics and finance to media and tourism. However, its story began with Hainan Airlines. In 1993, Hainan Airlines was launched by Chen Feng and Wang Jian, flying a handful of aircraft to ‘China’s Hawaii.’ The airline rapidly expanded, thanks to its superior service, on time performance, and head-turning fleet of Boeing 737s.
The airline’s success spurred the pair to diversify the business, forming the HNA Group in 2000. From there, the group embarked on a significant spending spree, fueled largely with bank loans and money from the airline business. It took up shares in Hilton Hotels, bought Gategroup and Swissport, owns the leasing firm Avolon… and the list goes on.
HNA Aviation is affiliated with multiple Chinese airlines, including Tianjin Airlines, Beijing Capital Airlines, Grand China Air, and more. It also has stakes in numerous airlines based outside of the Chinese mainland, including Hong Kong Airlines, Africa World Airlines, Comair and Tap Air Portugal.
But all this spending was to be the downfall of the group. Amid increasingly burdensome finances, a group made up of China’s aviation regulator and other government officials stepped in to reform HNA Group’s finances. This was done at HNA’s request.
Prior to this, HNA had signed agreements to sell its shares of smaller airlines to local governments. However, these deals stalled as the financial health of the company became more of a concern. The agreements to sell will likely be key to the restructuring that is to come, and pushing them through will become a priority in order to save Hainan Airlines.
For the time being, Hainan Airlines has said it is maintaining usual operations.