The highest court in China’s Hainan Province has placed Hainan Airlines, including its six air carrier affiliates, in reorganization process in response to creditors’ applications for bankruptcy restructuring.

On February 10, 2021, the People’s High Court of Hainan Province approved applications for bankruptcy reorganization of six Hainan Airlines airlines: Air Chang’an, Lucky Air, Fuzhou Airlines, Urumqi Air, Beibu Gulf Airlines, also known as GX Airlines, and Grand China Air.

According to People’s High Court, Hainan Airlines, the parent company of above-mentioned subsidiaries, would start the reorganization process and keep the right to exercise shareholder rights, in accordance with the law, to “assist and guide the subsidiaries to actively perform daily operations and management on the existing basis.”

Besides six airlines, People’s High Court of Hainan Province also approved reorganization of four other Hainan Airlines subsidiaries: HNA Aviation Technology, Hainan Fushun Investment, Beijing Kehang Investment, and by now-defunct Shanxi Airlines, which was merged with Grand China Air in 2007. 

Previously, HNA Group said that the operations of its flagship air carrier Hainan Airlines and its subsidiaries 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 stated on February 1, 2021.

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On January 29, 2021, HNA Group applied for bankruptcy and reorganization after a long period of financial struggles. The move to file for bankruptcy came after a Chinese government-led group finalized due-diligence at HNA Group and laid out risk disposal plans on January 22, 2021.

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 what is one of the largest conglomerates in China, as it struggled to overcome the debt crisis made worse by the COVID-19 crisis. The move was made at HNA’s request.

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