Three HNA Group subsidiaries, including the HNA’s flagship air carrier Hainan Airlines, reportedly revealed an alleged money embezzlement of nearly $10 billion by the group’s shareholders.
A total of 61.5 billion yuan ($9.57 billion) had been allegedly embezzled by the group’s shareholders, as the Hainan Airlines, HNA Infrastructure Investment and CCOOP Group outlined in documents seen by Reuters on January 29, 2021. However, the identities of the shareholders had not been disclosed.
On February 1, 2021, HNA-related stocks, including Hainan Airlines, HNA Innovation, HNA Technology, and CCOOP Group, fell between 5% and 10%, as the troubled conglomerate applied for bankruptcy and reorganization after a long period of financial struggles on January 29, 2021. The move to file for bankruptcy came after Chinese government-led group finalized due-diligence at HNA Group and laid out risk disposal plans on January 22, 2021.
Following the news, on February 1, 2021, HNA Group said that the flagship air carrier Hainan Airlines operations were stable.
“The operation of the main aviation company is stable and normal, and the rights and interests of passengers, such as products purchased, members, and points, will not be affected,” HNA Group statement reads.
However, the government-led team expected around 500 companies linked to HNA Group to go into bankruptcy restructuring, Chinese financial magazine Caixin reported on January 30, 2021, citing insider sources. Caixin previously reported that HNA Group had more than 2,300 subsidiaries.
HNA Group once attracted global attention for its aggressive spending, including stakes in hotel giant Hilton and Deutsche Bank. However, the Group’s liquidity issues emerged in 2017.
In February 2020, Chinese authorities stepped in to run one of the largest conglomerates in China, as it struggled to overcome the debt crisis made worse by COVID-19 crisis. The move was made at HNA’s request, according to the statement.
The latest financial report it published, covering the first half of 2019, showed that the company had 706.7 billion yuan ($109 billion) of debt.
AeroTime News reached out to Hainan Airlines and HNA Group for comment and did not receive any answer at the time of publication.