In mid-February I wrote about how signs were pointing to the end possibly being near for Hainan Airlines, which I consider to be mainland China’s best airline, by far.
Hainan Airlines had been in especially bad financial trouble for a couple of years, as parent company HNA Group was selling off assets. In mid-February we learned that the government was in talks to take a controlling stake in HNA Group (Hainan Airlines’ parent company), as the company is unable to meet their financial obligations.
They were in a terrible situation before, but the coronavirus situation has understandably made the situation exponentially worse.
Well, it looks like that’s now becoming a reality. HNA Group will essentially be taken over by the government of the Hainan province in order to try and be rescued. HNA Group posted the following on their website (translated with Google Translate):
Since the outbreak of liquidity risk in late 2017 , with the support of all parties, HNA Group has actively carried out “self-rescue” but failed to completely resolve the risk. Affected by the epidemic of “new crown pneumonia” at the beginning of 2020, the liquidity risk will increase.
In order to effectively resolve risks and safeguard the interests of all parties, at the request of the Group, the Hainan Provincial People’s Government has recently led a joint effort with related departments to set up a “Hainan HNA Group Joint Working Group.” The joint working group will fully assist and make every effort to advance the Group’s risk management work.
The leader of the joint working group is Gu Gang, chairman of Hainan Development Development Co., Ltd., and the executive deputy leader is Ren Qinghua, director of the management committee of Hainan Yangpu Economic Development Zone. Li Shuangchen, Cheng Gong, deputy director of the Credit Management Bureau of China Development Bank.
As of now we don’t know what this means for the future of Hainan Airlines:
- Will the government try to help Hainan Airlines remain independent?
- Will the government try to merge Hainan Airlines into another airline, whether state owned or “private?”
- Will Hainan Airlines just end up being liquidated, assuming there’s no other practical path forward?
As of now the airline is continuing to sell flights (well, flights for the routes they haven’t canceled), so for now we’ll have to mark this as “developing.”
(Tip of the hat to @DominicusHKG)
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