【2020.2.29 Update】What had to happen has happened, and HNA Group announced today that it has officially been taken over, with a joint task force of the Hainan provincial government and banks handling the takeover. The official notice is here:

Since liquidity risks emerged at the end of 2017, with support from all sides, HNA Group has actively carried out self-rescue measures, but has not completely resolved the risk. Since the beginning of 2020, the impact of the COVID-19 outbreak on top of that has further intensified the liquidity risk.

To effectively resolve the risk and protect the interests of all parties, at the request of the group, in recent days the Hainan Provincial People’s Government, together with relevant departments, sent professionals to jointly set up the “Hainan Provincial HNA Group Joint Working Group.” The group will comprehensively assist and vigorously push forward the group’s risk handling work.

The group is led by Gu Gang, chairman of Hainan Development Holdings Co., Ltd., with Ren Qinghua, director of the Hainan Yangpu Economic Development Zone Management Committee, serving as executive deputy head. Deputy heads are Li Shuangchen, deputy director of the Civil Aviation Administration of China’s Central-South Region, and Cheng Gong, deputy director of the Credit Management Bureau of China Development Bank.

HNA has not been dismantled, and it has not been merged into another airline, which is probably a relatively good outcome. I hope the pandemic ends as soon as possible and HNA Group can get through this difficult period.

【2020.2.19】In recent years, HNA Group has repeatedly been reported to have financial strain, with frequent cases of salary delays. Its controlled carrier, Hong Kong Airlines, has even had boardroom battle reach Hong Kong’s High Court, and in court it was sued for debt collection by an Irish aircraft leasing company, after which the aviation regulator in Hong Kong imposed finance-related licensing conditions. Prior to that, HNA Group had also sold a large amount of offshore assets.

The economic losses to aviation caused by this COVID-19 (2019-nCoV) outbreak are severe, so today there are rumors that HNA Group’s assets may be spun off. The HNA core may be allocated to Air China Group, Jinpeng Airlines may be sold to Jiangsu, and other subsidiaries would be taken over by China Southern and China Eastern.

For frequent flyers, this means the reach of the Jinpeng Club will likely shrink significantly (or even disappear, including under the eventual company that takes over control after a breakup). HNA’s overseas routes have often attracted passengers with relatively low fares. If the rumors are true and it is absorbed by Air China, I believe this would reduce competition on international routes in China, which is not necessarily good for consumers.

I hope other airlines can also get through this difficult period.