Dhaka: China eyes to take over HNA Group and sell off its airline assets as the coronavirus pandemic has hit the Chinese conglomerate's ability to meet financial obligations, according to latest reports.
China has begun assuming control of debt-laden HNA Group, which has a 19.85 per cent stake in Virgin Australia, as Beijing tries to soften the blow from the coronavirus' hit to the national economy.
Recently, the Hainan provincial government appointed new leaders for HNA and "assuming management of its liquidity risks is tantamount to China declaring it’s taking over decision making at the group", a news agency cited people familiar with the matter.
"State authorities will now go through HNA’s books to figure out how to sell off the group’s assets and pay off debt," reports said.
"HNA said the move does not translate to a takeover and does not involve changes in the controlling shareholder. A representative for HNA did not immediately respond to requests for further comment," the reports added.
Virgin Australia Holdings Ltd became the first airline in Asia to fall victim to the coronavirus as the pandemic cost the debt-burdened company of almost all income.
Administrators at Deloitte, who have taken control of the Brisbane-based carrier, aim to restructure the business and find new owners within months. More than 10 parties have expressed an interest, Deloitte said on April 21.
HNA's travel business has also been so "decimated" by the coronavirus outbreak that Beijing has concluded "the Hainan-based group would not be able to avert collapse without state intervention". HNA has debt totalling some USD 115.2 billion.
HNA owns several carriers including its flagship Hainan Airlines. About 80 per cent of China flights have been halted because of the coronavirus outbreak, and the Montreal-based International Air Transport Association (IATA) estimates the epidemic will cost the global industry about USD 30 billion in lost revenue, according to latest reports.