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State airlines shy away from HNA restructuring, which is postponed for three months

  • The state carriers have stayed away from HNA because of the impact of Covid-19, sources say
  • Deadline for the submission of a restructuring proposal has been postponed to November 10

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HNA Group’s debt amounts to at least US$187 billion. Photo: Reuters
Iris Ouyang
Embattled Chinese conglomerate HNA Group will delay the submission of a proposal for the restructuring of its heavily indebted airlines-to-property business, as China’s state-owned carriers have steered clear of bailing out the country’s biggest private-sector carrier, according to sources familiar with the matter.
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The restructuring of Hainan-based HNA will most probably involve consortiums comprising multiple companies. The government working group that seized control of HNA in late February 2020 will make sure Hainan Airlines remains a private company and will ring-fence it from the country’s three biggest state-owned carriers, said the sources, speaking on condition of anonymity. HNA Group’s debt amounts to at least US$187 billion.

HNA Group and Hainan Airlines did not respond to requests for comment.

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HNA, which used to own a global assets portfolio that ranged from the largest stake in Deutsche Bank to 25 per cent of Hilton Hotels, entered bankruptcy restructuring in January, a year after its previous management was ousted in a state takeover. As a state ward, the company began looking for strategic investors publicly in March and has been shedding its international assets.

A deadline for HNA’s restructuring plan was postponed to November 10 from August 10 by the Hainan High People’s Court in a ruling last Friday. The provincial authorities, which are represented on the committee that oversees HNA, want the management of HNA’s airport assets – including Haikou Meilan International Airport, the gateway to Hainan province’s capital – to remain in state hands. They also want at least one member of any consortium for airport assets to be a state-owned enterprise, the sources said.

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