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Exclusive | Citic Group, Wuxi company and Henry Tang’s family in talks to buy Hong Kong Airlines, putting an end to boardroom tussle

  • A consortium of mainland Chinese and Hong Kong investors are bidding to buy Hong Kong Airlines
  • The purchase, which is still under negotiations, will involve at least 2 billion yuan of fresh capital into the carrier, and the investors assuming part of the airline’s debt, sources said

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Hong Kong Airlines is the city’s third-largest carrier. Photo: Dickson Lee
Enoch Yiu

A consortium of mainland Chinese and Hong Kong investors is bidding to buy Hong Kong Airlines, offering an end to the messy boardroom tussle at the city’s third-largest carrier and a financial lifeline to the debt workout by one of China’s biggest asset buyers.

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The investors comprise the family of Hong Kong’s former chief secretary Henry Tang Ying-yen, include a unit of Citic Group, and Wuxi Communications Industry Group, the Chinese owner of the Dornier Seawings amphibious aircraft maker, according to several sources familiar with the deal. The new investors will inject at least 2 billion yuan (US$291 million) of capital and assume part of the carrier’s debt, the sources said, declining to give their names for speaking on a deal still under deliberation.

The entry of new investors would put an end to the legal tussle that has engulfed the troubled airline for months, as rival camps of directors jostled for control of the carrier that has a fleet of 28 aircraft. An August 22 hearing for the case has been withdrawn, as the entry of a new controlling shareholder makes the tussle moot.

The takeover adds to the US$40 billion of assets that Hainan-based HNA – China’s most voracious buyer of global assets from hotels and golf courses to banks and land parcels as recently as in 2017 – had sold in the past 18 months to repay debt. China Development Bank, which is in charge of HNA’s debt impairment programme, has given its nod to the sale, the sources said.
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“There are still a lot of enticing points about the carrier, from its [route] network to its fleet,” said You Luya, transport analyst at Bocom International. “Any investor looking to get involved with Hong Kong Airlines would need to be in it for the long haul. We don’t expect the carrier to witness a massive turnaround in the next two to three years even with investor influx given capacity restrictions at Hong Kong International Airport and at key destinations and Cathay Pacific’s aggressive expansion.”

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