Shares of HNA Group affiliates rally after report of China bailout plan

BEIJING: China plans to take over indebted conglomerate HNA Group Co and sell off its airline assets, the most dramatic step to date by the state to contain the deepening economic damage from the deadly coronavirus outbreak. HNA-related shares rose.

China is under growing strain from the shutdowns imposed to curb the coronavirus, which has killed more than 2,000 people. HNA-backed Suparna Airlines is also likely to be unloaded to the Jiangsu provincial government, the people said. Discussions with the airlines are continuing, they said. HNA has been slimming down after a US$40 billion buying binge left it with one of the highest levels of corporate debt in China.

“HNA is, even by Chinese standards, a sprawling and indebted conglomerate, and the collapse in Chinese airline activity due to the outbreak of Covid-19 has apparently pushed it to effective bankruptcy,” London-based Agency Partners analysts led by Nick Cunningham wrote in a note after Bloomberg’s report.HNA-related shares jumped.

In an attempt to stabilise the financial situation, HNA has been looking to divest assets including plane lessor Avolon Holdings Ltd, which is worth about US$8.5 billion, as well as Swiss aircraft-maintenance firm SR Technics and container-leasing business Seaco, people familiar with the matter have said.

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