Hainan Airlines shares came close to suspension

Hainan Airlines shares fell almost by the daily limit in trading today in Shanghai after the airline warned of a loss of between 58 billion yuan (US$8.98bn) and 65 billion yuan just over US$10bn. The shares fell 9.8% to 1.38 yuan at the close. Strangely the airline said it expected the losses were due primarily to the problems at HNA. There is only one logical conclusion to draw – The airline is writing down the value of its fleet and other associated assets and relinquishing some assets into the HNA process. Were the valuations really that inflated? It also has to be added that this loss range is higher than all the losses at the three state owned majors put together for 2020. We are told that the airline will spend 2021 negotiating to bring in strategic investors. In a strong market you could argue that aspects of the airline would be highly attractive and would drive a premium – but in this market you have to wonder what bargain investors will demand.