HNA Group stated today in a post that the Group received a notice issued by the Hainan Provincial Higher People’s Court that creditors had applied to the court for bankruptcy proceedings to begin “due to HNA Group’s inability to pay off due debts”. The group stated that it will “cooperate with the court in a judicial review”, “actively promote debt restructuring” and “support the court to protect the legal rights and interests of creditors in accordance with the law”. The bottom line is will Central government come to the aid of HNA (again)? We think it is more likely that Central government will step-in to control some assets while letting the main company break-up but it would be a shock if they let the brand fail – if they did then executives will be on the front line of significant criticism.
HNA Group is headquartered in Haikou, Hainan, China. Founded in 2000, it is a part owner of Grand China Air, and owns 25% of Hilton Worldwide.
The liquidity shortage also led the non-delivery of up to six Airbus A330 aircraft to be delivered to the group.
HNA Group has stakes in numerous airlines: Hong Kong Airlines (gone) / Africa World Airlines, Azul Brazilian Airlines (23.7%),Comair (6.2%), MyCargo Airlines, TAP Air Portugal (2.5%) a pending stake in Virgin Australia (13%). On 27 March 2019, HNA Aviation sold its stake in HK Express to Cathay Pacific for HK$4.93 billion.
Hainan Airlines responded to the bankruptcy reorganization of HNA Group stating that “the company is in normal operation at present”.
HNA Group also owns 32% of Bohai Leasing, which in turn still owns a majority share (70%) of Avolon. HNA directly owns 6% of CDB Financial Leasing which in turn owns CDB Aviation.
It’s no surprise, we all expected this prior to the end of this month, as central Party support for HNA executives has evaporated and Beijing had already started to distance itself from the company over the past few weeks. HNA’s buying spree over-extended the firm and drew ire from the Chinese government, which prompted the company to sell many of its purchases to focus on its airline and tourism in 2017. The impact of COVID-19 on the company has been significant. But only last week the company confirmed that it was working to resolve its liquidity issues after the government officials were said to have completed their review of the firm and were working to restructure its finances.