Credit: Kevin Jia


The provincial government of Hainan, China, is moving to take control of HNA Group’s Hainan Airlines, of which it is already a major indirect shareholder.


The deal will proceed, said a source close to the provincial government and another from a creditor company. Whether to include other, smaller HNA airlines in the transaction is still undecided, said the first source.


A third source, from within HNA, confirmed that talks were underway.

中国民用航空局 (CAAC) 本月表示,将支持航空业整合以有效抵御武汉疫情传播,因此把海航旗下航空公司跟中国三大航空公司合并肯定是可能的。海南航空是中国第四大航空公司,仅次于中国南方航空、中国国航和中国东方航空。

Since the Civil Aviation Administration of China (CAAC) this month said it would support consolidation of the industry as part of the response to the Wuhan virus epidemic, merging of HNA’s airlines into the three main Chinese carriers must be a possibility. Hainan Airlines is the fourth-largest Chinese airline, behind China Southern Airlines, Air China and China Eastern Airlines.


HNA has been widely known for two years to be struggling with debt. Its trading position and balance sheet have obviously worsened with the outbreak of the virus, known as COVID-19, which has caused the Chinese airline industry to suspend most operations. 

伦敦咨询公司Agency Partners的分析师表示:“即便以中国的标准衡量,海航集团也是一家规模庞大且负债累累的企业,由于COVID-19的爆发,中国航空业活动大幅减少,这显然已将海航集团推向破产的境地。

 “HNA is, even by Chinese standards, a sprawling and indebted conglomerate, and the collapse in Chinese airline activity due to the outbreak of COVID-19 has apparently pushed it to effective bankruptcy,” said analysts from London consultancy Agency Partners.


Hainan Airlines is the leading airline in the group, which has also repeatedly set up smaller carriers in partnership with provincial or city governments in mainland China, especially over the past decade. It also has shareholdings in airlines elsewhere.


The operating condition of these smaller carriers varies. Some, such as West Air in Chongqing, were trading well before the epidemic. Some may need rescuing, but for each of them there should be a good chance that help will come from the governments of the provinces and cities where they are based. 


The Hainan government could conceivably inject capital into many or all of HNA’s airlines, stabilizing them in anticipation of selling small carriers to other authorities. The minor airlines include those based in and named after the cities Tianjin, Fuzhou, Guilin and Urumqi. Capital Airlines in Beijing is another large part of HNA’s aviation business.


Since the future of the smaller airlines had not been decided on Feb. 20, according to the source who mentioned that issue, conclusion of the talks may take some days. 


The government will buy more shares in Hainan Airlines as part of the assumption of control, said that source. A Hainan government company owns 25% of a company that is in turn the major shareholder in Hainan Airlines. The airport of the provincial capital, Haikou, is another indirect shareholder.


The group also owns lessors Bohai Leasing, Hong Kong International Aviation Leasing (HKIAL) and Avolon, which absorbed the CIT aircraft leasing business in 2017.

Agency Partners 指出,该集团的航空公司似乎只从空客和波音订购了11架飞机:五架A330和六架777F。该咨询公司补充称:“但海航集团通常会利用未披露的组合订单、中国政府的大宗订单以及借助租赁公司来满足其飞机需求。”“因此,我们认为,还有CIT的38架波音飞机(两架787、36架737MAX)以及266架A320neo(主要是Avolon的,但HKIAL的占70架)未交付使用,这更能说明海航集团作为未来客户的重要性。”

Agency Partners points out that the group’s airlines merely appear to have orders for only 11 aircraft with Airbus and Boeing: five A330s and six 777Fs. “But HNA has typically used a mix of undisclosed orders, Chinese government block orders, and leasing companies for its aircraft needs,” the consultancy adds. “The outstanding public backlog of 38 aircraft for CIT from Boeing (two 787s, 36 737MAXs), and 266 A320neos (mainly Avolon, but 70 for HKIAL) are therefore, in our view, a far better indication of HNA’s importance as a future customer.”

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