Hainan Makes Plea for Government Aid as Coronavirus Outbreak Looms

A Hainan Boeing 787-9 departs from Boston (Photo: AirlineGeeks.com | Ian McMurty)

[ News ]March 7, 2020 4:41 am ET

By Will Lee

Amid the coronavirus outbreak, Hainan provincial official authorities have been named to be on a committee at the HNA Group, the parent group of Hainan Airlines and Hong Kong Airlines.

HNA Group admitted its financial difficulties and requested assistance from the government. Earlier, it was widely rumored that stated-owned China Eastern Airlines, China Southern Airlines and Air China will purchase HNA Group’s assets. However, its affiliate company, HNA Technology Investment Holdings Limited denied the rumor.

Feng Chen, the chairman of HNA Group unveiled as of Jun.30, the total debt of the group was $108 billion USD and recorded a loss of $502 million USD in the first half of last year.

HNA was founded in 1993 and owns Hainan Airlines. Following a several year-long spending spree, the conglomerate has made acquisitions in many countries. The former regional airline became a group creating 410,000 jobs and assets of $180 billion. Moreover, the group purchased Hilton Hotels and Deutsche Bank in 2016 and 2017 respectively.

But the acquisition did not pave the way to success, HNA’s rapid expansion became a debt-laden company, most of its investment were from loans and not profitable. The group was forced to offload some assets and pay off its debt. Hong Kong Express, a no-frills airline, was affiliated with HNA which sold to Cathay Pacific last year.

At the end of 2019, Hong Kong Airlines, the group’s subsidiary in Hong Kong, staff did not get their salaries on time. The government urged the airline increase funding otherwise their license would be revoked.

But the struggling airline is facing another severe round of turbulence. The coronavirus has caused a drastic drop of travel demand across the globe. Recently, the airline sacked almost 170 jobs.

Meanwhile, the group has some positive news. As a result of the work resumption in the country, Hainan Airlines, the group’s flagship carrier, will resume almost 2000 domestic flights in a week. According to the airline, it resumed 450 flights last week for the workers.