HNA Group: Restructuring work completed

HNA Group, the Haikou-based conglomerate, has completed its restructuring work, which has been the largest debt-restructuring case in China after the company filed for bankruptcy with billions of dollars of debt in 2021.

All four reorganization plans related to HNA have been completed with court approvals, and a special service trust for follow-up debt repayment has been established according to law, the conglomerate said in a statement on Sunday.

In February 2021, HNA was officially accepted by the court for bankruptcy reorganization. Now, the assets of HNA have been separated into four parts, including three independently listed companies and another group that includes the merger and reorganization of 321 companies.

The 321 companies of HNA have been divided into different business segments, including air transportation, airport operation, ship manufacturing, financial services and hotel business, with a business management company in each segment to manage different business segments.

“The completion of the bankruptcy and reorganization of HNA has helped to restructure the debt, injected capital, cut aircraft rents and brought a new management concept to the group. Next, it can compete in the market with a lighter burden,” said Lin Zhijie, an aviation industry analyst and a columnist at Carnoc, a major civil aviation website in China.

“Still, the restructuring work doesn’t mean that HNA has completely walked out of its crisis.

This is expected to be a rebirth for the company, and it still faces multiple challenges in the future,” Lin said.

In December, China’s fourth-largest carrier Hainan Airlines transferred its core aviation business to Liaoning Fangda Group Industrial Co Ltd, its strategic investor, as parent company HNA faced bankruptcy and restructuring. Liaoning Fangda is a conglomerate with businesses involved in the carbon, steel and pharmaceutical sectors.

Liaoning Fangda has invested 38 billion yuan ($580 million) in the main business of Hainan Airlines, in addition to 3 billion yuan of risk mitigation funds. After the reorganization, Liaoning Fangda has achieved absolute control over the airline business of the carrier.

After the reorganization, HNA will put more effort into the operations of its 321 companies. The group aims to enable the asset values of the 321 enterprises to return to a normal level and gain appreciation within two years, and then achieve stable growth, Gu Gang, Party secretary of HNA, said earlier.

Since 2010, HNA acquired around 40 overseas assets to rearrange itself and step up its global expansion, and the total transaction amount exceeded $50 billion. Later, it began facing financial difficulties due to stricter controls and liquidity concerns and started seeking buyers for its assets.

“Due to the COVID-19 pandemic, the aviation sector has seen significant negative impact. Now, problems such as a lack of internal management and radical investments still need to get further improved for HNA,” Lin said.

“Besides, more than 10 airlines affiliated to the group need to coordinate well with each other, and the group should consider reducing the loss due to operating a large number of wide-body aircraft,” he said.

This is expected to be a rebirth for the company, and it still faces multiple challenges in the future.”

Lin Zhijie, an aviation industry analyst at Carnoc

YANG GUANYU / XINHUA A Hainan Airlines passenger aircraft is seen docking at Haikou Meilan International Airport in November.